NBCUniversal could have renewed its soon-to-expire film output deals with competing streaming services; it could have gone the Disney route and kept its movies for itself via Peacock. In the end, the answer was a little bit of both — or as Universal described it, a “modernized windowing structure.”
Translated, that means Amazon and Universal made a multi-year licensing deal in which Prime Video gets new theatrical releases after they’ve left theaters and after they’ve spent four months on Peacock. They’ll spend 10 months on Prime before returning to Peacock for another four months and then leaving again for other revenue streams.
The deal starts in 2022, and will also include prominent franchise library titles: “Fast & Furious,” “Jurassic Park,” and “Bourne” movies. They’ll all be available on Prime Video as part of the deal and Amazon’s free, ad-supported streaming service, IMDb TV, also gets an exclusive window for Universal’s 2020-21 slate, including “F9.” That represents a win in Amazon’s under-the-radar bid to make IMDb TV a major player in the streaming landscape; as Deadline noted, it’s the first AVOD service to get a TV-rights deal from a major studio.
Bloomberg reported today that as of late April, Comcast’s Peacock has about 42 million sign-ups but about 2.8 million paying subscribers (with another 11 million or so using its ad-based free tier or accessing it through a cable provider). By comparison, Disney+ has about 38 million paid subscribers in North America; Netflix, 74 million.
With Universal’s most valuable properties living on a competitor’s service, it’s easy to read the strategy as a vote against the future of Peacock, which hasn’t benefited from the day-and-date draw of HBO Max releases nor the buzzy titles of Disney+ and Netflix. (Imagine if Disney did the same with “The Avengers” or “Star Wars?”)
This strategy speaks to a studio that sees value in going after pandemic-proven revenue streams. As IndieWire’s Tom Brueggemann reported, Universal’s Peacock dance is a clear sign Universal wants to protect its PVOD window. After three weekends in theaters, its pandemic-era releases typically move to PVOD where they generate 80 percent returns on its $19.99 rentals. (Compare that to the 50-50 split studio-theater splits, or the enigmatic math required to determine the financial performance of a movie on streaming.)
The Amazon-Universal deal is reminiscent of the one inked by Netflix and Sony earlier this year, which gives Netflix an 18-month exclusive window for Sony’s theatrical titles beginning next year. Deadline placed that deal at an estimated $1 billion. The difference here is Sony had no homegrown platform to feed.
As companies build subscriber numbers and pump billions into content, the streaming wars are prohibitively expensive. Disney’s streaming lost $300 million in Q1 2021. Building a streaming business means forgoing old-fashioned output deals, which have long been one of the most reliable revenue streams.
Universal’s “modernized windowing structure” — theaters, PVOD, Peacock, Amazon, and back to Peacock — is a unique strategy, but that’s not bad thing. In the current business environment, familiarity looks less comforting and more like a pretty good breeding ground for contempt.
Speaking at Sun Valley this week, incoming CEO of the soon-to-be-merged Warner Bros. Discovery David Zaslav promised more mergers. “There’s a lot of assets out there that have good IP that will probably get new homes,” he told the New York Post. Universal’s approach may represent a smart long-term financial move that borrows from the past while looking toward the industry’s future trends.
And for Amazon — for which money is virtually no object in its bid to touch every corner of consumers’ lives — the studio tentpoles are another piece of its entertainment puzzle, one bolstered by a growing number of TV shows and movies that will only get bigger when it completes its acquisition of MGM.