Decoder with Nilay Patel
00:59:03 · Nilay Patel, Matt Strauss
[00:59:03] S4: Do you care that you don't own your last mile customer that way? This was a big reason everyone went to streaming is they were selling their content to Netflix and they realized Netflix owned the customer And we all got to stand up our own streaming services because we want to own the customer and the cable bundle is falling apart. Do you care now that as you rebundle, YouTube will own the customer and [00:59:23] S5: stuff like that? I think think that that when you say own the customer, really what you're talking about is how do I have the ability to personalize the experience in a way that I could superserve an individual both with content and with advertising. And that's ultimately going to create the monetization engine that we need. I think when I was describing the value of Peacock and the fact that 80% of our subs are on the ad platform, and we typically charge premium CPMs, is because we have this ability to super serve our fandoms and franchises, and we have the data to do it. I think that our relationship with YouTube that we announced this summer is going to allow us to have a much deeper integration with YouTube on the data side, as well as the integration with FreeWheel. And so we're at a point where we're almost indifferent again about where does somebody consume the content. [01:00:23] S4: FreeWheel, by the way, your programmatic advertising business.
01:00:23 · Nilay Patel, Matt Strauss
[01:00:23] S4: FreeWheel, by the way, your programmatic advertising business. [01:00:25] S5: Yes. And so that was a critical part to this unlock with YouTube because we can create a bundle which is going to drive incremental subscribers and value. To your point, YouTube TV is the fastest growing pay TV distributor. I think the pay TV ecosystem has been declining at like a 6% to 7% CAGR. YouTube TV over the past five years has grown at like a 26% to 27% CAGR. They've got over 10,000,000 subscribers and are likely going to be the number one pay TV distributor in the next couple of years. We extended our linear portfolio agreement with YouTube TV, which is going to provide us stability and growth on that part of our portfolio as well. And then what we were just describing around having a much deeper integration on the data, on the analytics, and on the targeting is going to allow us to monetize our inventory. And so it's all of these pieces where we think this is an example of how we're trying to think differently, how we're trying to be innovative, identify strategic partners. I don't know if the red company or the blue company would be in a position to do the kind of deal that I'm describing. But I think it's precisely because we are independent and looking to be more flexible. I think that that actually becomes a calling card for how we could work with other companies in a way that is really transformative.
01:01:49 · Nilay Patel, Matt Strauss
[01:01:49] S4: Let me ask you, I think the red company got, hypothetically got, turned upside down because they relied on data too much for their programming. And now they're gonna change a bunch of programming executives, and we'll see where they go. Blue company, hypothetical Blue company led by the hypo... Hypothetical son of a billionaire is out in the market. They've made a big content acquisition. And he's saying, oh, we're gonna invest in technology, and we'll compete with Northern California, and we'll compete with any of the platforms based on our technology bet. That to me seems like an old story and like a story where I know the ending, which is trying to run at TikTok's technology without the content is just gonna get you backwards. How would you... If you were running the blue company, how would you think about technology in that way? [01:02:33] S5: Well, let me... I'm gonna answer the question based on how I'm running our company. [01:02:39] S4: No, no, why not? The blue company's new. Anything can happen with the blue company.
01:02:39 · Nilay Patel, Matt Strauss
[01:02:39] S4: No, no, why not? The blue company's new. Anything can happen with the blue company. [01:02:42] S5: Well, think my answer though is it would not change depending on where I sat within this industry, which is I believe that we need to be an open ecosystem, that you've got to go where the viewers are. And that's what led us to do a lot of strategic decisions, whether it's the deal that I just described with YouTube. We've done channel deals for the ad free tier of Peacock with Amazon and with Roku. We've done bundling deals. We've done a bundle deal with Apple. We've done a bundle deal with Walmart. You're trying to give consumers choice. And everything I've done in my career has always been around a North Star of give consumers choice, what they want, when they want, where they want. And that to me has been the mantra in how we're trying to build our company. Now all of that being said, I still also am a huge believer in the product, in the technology, the experience. When I talked earlier about the Olympics, you may be able to watch the Olympics on another platform through NBC or through Peacock, but I truly believe the best experience Yeah. Was on Peacock. Are you allowed to say that [01:03:51] S4: on other people's networks? Can you can you go on to... On the Amazon channels and say, if you... This is great. But if you want the first... Like, get out of this app and open Peacock. Do they let you say that?
01:04:00 · Matt Strauss
[01:04:00] S5: Well, I wouldn't say it that way, though. What I would do is, first of all, I think to when somebody subscribes to Peacock, they should be able to access our service regardless of the platform. And so in that respect, we do cross authentication. Meaning you know that. And so you could subscribe and watch on Peacock, or you could subscribe and access our service through channels. I'm not here to tell the consumer what the best experience is. I think that we lead by example. I think that the consumers vote based on where they ultimately decide to engage. And so if you want to get access to some of these cool features that I'm describing, or if you want to play a game that we created, or if you want to listen to a podcast, or I'll give you another example, which is we're testing now a membership program. Because we shouldn't think of viewers as subscribers. We should think of them as members, right? And so what are the other values that you can get as part of being a member? Well, maybe some of those values could be based on your tenure or your level of engagement. Maybe you get discounts to NBC merchandise. Maybe you get special access when you go to Universal theme parks. Maybe you get discounts from some of our advertising partners like Domino's. And so how do we start to add more value? But maybe that membership is only available when you're on our platform. And so I think of it more as give consumers the choice, but at the same time, we are investing in product and technology and on experiences that are really meant to be delivered upon the platform that we have created. And we've got an unbelievable team, in my opinion, that has created a best in class scalable platform that not only powers Peacock but it's the same platform that we also use to power Sky Now television. It's the same platform that we've also distributed in dozens of countries around the world. And we've got a world class team that I think is really when it comes to the especially these major tentpole events is really trying to transform and surprise and delight viewers in a way that I'm not sure other platforms are going to be able to do around our content and our franchises.
01:06:18 · Nilay Patel
[01:06:18] S4: I want to end by asking maybe the most important question of all. We're talking a lot about internet distributed businesses and consumers signing up for services and being able to churn and quit. And there's a lot of free market dynamics there, which I think are very powerful and very important. And that means you get to program whatever you want to program, and you have chosen live and sports. And importantly, you mentioned news at the top of this conversation that NBC News is part of this portfolio. NBC News is also distributed over broadcast. It's distributed over the air. And the Trump administration, in particular, FCC chairman Brendan Carr, has expressed a lot of desire to pressure broadcast networks because you use the public spectrum, and in particular, news networks. And he's, you know, he's withheld the broadcast licenses for ABC stations, for example. He has threatened the other broadcast networks. There's a lot of pressure on NBC News. How are you handling that? Are you pushing back? Because that is the one place where you're not allowed to just do whatever you want. Right? The the the government gets to tell you what to say in an increasingly uncomfortable way.