The Medium
Monday AM Briefing: Bigger won't be better at 2023 Upfronts
In Q2 2023, PARQOR will be focusing on three trends. This essay focuses on "The definition of scarcity is continuously evolving away from linear and towards walled gardens."
To remind you, PARQOR identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the media marketplace. Must-read stories or market developments are not always obvious from press reports or research analysis, and often require a deeper dive. PARQOR’s analysis questions established ideas and common wisdom, reassesses the moving pieces, and reveals the potential in the media marketplace in 2023.
The question I keep finding myself coming back to after last Monday's essay is, what if WWE CEO Nick Khan is right?
What if WWE content is a better "glue" for tying together NBCU's most expensive investments in streaming ($22.5 billion in content spend overall, $3 billion on Peacock) than NBCU’s broader content strategy for broadcast, linear and Peacock? Because, as I wrote last Thursday, Khan seems to be reinforcing Disney CEO Robert Iger’s concerns about the future of “general entertainment”: media companies are better off investing in content that matches the affinities of the most passionate and engaged consumers.
Khan has delivered a message that is both helpful and unhelpful for NBCUniversal. It is helpful in the sense that he has highlighted how intelligent NBCUniversal management was in investing $1B to host the WWE Network on Peacock. The WWE Network on Peacock delivers all premium live events, including WrestleMania, scheduled programming and a video-on-demand library. So WWE fans — which Khan has said are “a significant number of Peacock’s paid subscribers” — have content options 52 weeks per year.
It is unhelpful because it implies that Peacock has few other offerings that engage its subscribers 52 weeks per year across other expensive investments like “Yellowstone”, and the English Premier League ($2.7 billion estimated over six years). Now, we don’t know whether that is true or not given NBCUniversal's opaqueness with Peacock data, but it would not be an unreasonable implication given Peacock’s struggles to scale its paid subscriber base until 2022.
Key Takeaway
The oddity of Upfronts in the streaming era is that bigger is not better, and that doesn’t make much intuitive sense in a media business whose entire foundation is scarcity.
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Total time reading: 5 minutes
That’s not the story a streamer like Peacock wants to tell heading into upfronts. Peacock has a success story, but to advertisers it may be a narrow success story: Upfronts are about scarcity or linear distribution model’s historical moat — the linear model enabled cable networks to aggregate ...