NBCU said it has secured exclusive domestic streaming rights to all nine seasons of the sitcom for a five-year term. The streaming service is expected to launch in mid-2020. Unlike new offerings from Disney, WarnerMedia and Apple designed to compete with Netflix when they hit the market soon, NBCU’s effort will be free to the company’s pay-TV subscribers and supported by advertising. It will launch across the combined footprints of Comcast and Sky, reaching more than 50 million households from the moment it goes live. A stand-alone, subscription version is also said to be in the offing.
“The Office has become a staple of pop-culture and is a rare gem whose relevance continues to grow at a time when fans have more entertainment choices than ever before,” said Bonnie Hammer, chairman of NBCUniversal Direct-to-Consumer and Digital Enterprises. “We can’t wait to welcome the gang from Dunder Mifflin to NBCUniversal’s new streaming service.”
Via Twitter, the official Netflix handle addressed the news. “We’re sad that NBC has decided to take The Office back for its own streaming platform,” it wrote, “but members can binge watch the show to their hearts’ content ad-free on Netflix until January 2021.”
Executives had been dropping strong hints that they were keen to pull back the workplace comedy and other shows as they geared up to enter the streaming sector in a major way. During the NBCU upfront presentation in May, ad sales chief Linda Yaccarino gave media buyers in attendance a clear indication of how much of a priority the situation is for the company and its parent, Comcast.
“Next year we’re going to unveil the largest initiative in our company’s history: We’re going to have our own ad-supported platform,” she said. “While other companies are pushing advertisers out, we’re bringing them in. It will have a slate of originals and a gigantic library of all favorites. The shows that people love the most and stream the most are coming home at a price that every person can afford: free.”
The Office move is sure to intensify scrutiny of the competitive moat enjoyed by Netflix and other subscription services and how long it can last. Because they had built their businesses on off-net programming, which represented some of the most popular in all of streaming, skeptics say the balance will shift once content holders start pulling back rights. Disney is the prime example, with its plan just now taking effect to forego hundreds of millions in annual licensing revenue in order to fuel its soon-to-launch Disney+ service.
The Office is believed to be the most watched acquired series on Netflix and its executives had said that they were planning to aggressively pursue a new deal for the show with NBCU when its current expires. The streaming giant is in similar position on another hugely popular acquired comedy series, Friends, which rights owner WarnerMedia plans to use as a cornerstone for its upcoming streaming platform.
For Netflix’s part, the streaming giant has countered that sentiment by saying that it has long anticipated needing to shore up its own originals as suppliers re-think their licensing strategies. Hit series like Stranger Things and crowd-pleasing movies like Bird Box or Murder Mystery are the result of that push, they say.
Shortly after tweeting about The Office’s upcoming departure, Netflix reminded its subscribers that it has Space Force, a new office comedy from The Office developer Greg Daniels starring The Office leading man Steve Carell:
The engineering know-how that goes into a product like Netflix’s is not to be underestimated, of course. Thousands of specialists have refined the algorithmic Netflix system, enabling it to scale to 150 million homes globally by tailoring the experience to each user. Its executive team has repeatedly cited non-entertainment rivals — video games, social media, even the need for people to sleep — as its greatest competitive threats. Last January, the company said it captures 10% of consumer TV screen time in the U.S., a figure it says leaves them plenty of room to continue gaining subscribers and viewing time.
NBCUniversal has not said when it will go live with its new service, but speculation is that the rollout will be timed with the 2020 Olympic Games in Tokyo in order to maximize promotional opportunities. The company is not the only one focused on a free, ad-supported streaming model. That approach can theoretically harness existing resources instead of requiring costly customer acquisition and fulfillment while bridging the worlds of linear and digital advertising, which have been gradually merging. Viacom bought Pluto TV for $340 million last January after having also held merger talks with Tubi TV, which just surpassed 20 million monthly active users. Sony swung a deal that closed in May that gave Chicken Soup for the Soul Entertainment majority control of Crackle, which was rebranded as Crackle Plus.
All of these ad-supported players cite research indicating subscription fatigue among consumers, who may have cut or shaved their pay-TV cord but still resist paying for more than three subscription services at a time.
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