Today, I\u2019m talking with Matt Strauss, who is now chairman of the NBCUniversal Media Group. This is Matt\u2019s second time<\/a> joining me on the show, and there\u2019s been a whole lot of organizational and structural change at NBCU since the last time he and I spoke just two years ago \u2014 pure Decoder<\/em> bait.<\/p>\n<\/div>\n First, about a month after Matt was on the show, Comcast spun off most of the NBCU cable channels into something called Versant. That\u2019s when Matt\u2019s title changed from heading up just the direct-to-consumer offering \u2014 meaning Peacock, plus some other streaming services \u2014 to heading up the whole thing, across all distribution. And now, Comcast is spinning off the NBCU business entirely<\/a> into a whole new standalone company.<\/p>\n<\/div>\n Verge<\/em> subscribers, don\u2019t forget you get exclusive access to ad-free Decoder<\/em> wherever you get your podcasts. Head here<\/a>. Not a subscriber? You can sign up here<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/div>\n That\u2019s a lot to have going on all at once! And meanwhile, it\u2019s only just this year that Peacock became an actual profitable business at all \u2014 and it\u2019s still pretty far away from being anything like the juggernaut that Netflix is.<\/p>\n<\/div>\n But what NBCU has, and what Peacock has, that the rest of the streaming industry is still trying to wrap its head around, is live sports. Sports are huge. They held up the cable industry for years, they held up broadcast, and now they\u2019re the big thing that could make streaming a winner for NBC.<\/p>\n<\/div>\n One thing before we start: You\u2019ll hear me ask Matt about the red company and the blue company. That\u2019s just my way of getting Matt to talk about Netflix and Skydance, the company that now owns both Paramount and Warner Bros. Discovery. I think he did a good job playing along.<\/p>\n<\/div>\n Before we get going, do me a favor and subscribe to Decoder<\/em> on YouTube, where we put out new episodes every Monday and Thursday.<\/p>\n<\/div>\n Okay: Matt Strauss, chairman of the NBCU Media Group. Here we go.<\/p>\n<\/div>\n This interview has been lightly edited for length and clarity.<\/em><\/p>\n<\/div>\n Matt Strauss, you are the chairman of the NBCUniversal Media Group. Welcome back to<\/strong> Decoder<\/em><\/strong>.<\/strong><\/p>\n<\/div>\n Thank you so much, Nilay. It\u2019s great to be back.<\/p>\n<\/div>\n I am very excited to talk to you. There\u2019s a lot going on in the media. It is a tumultuous time in Hollywood. I have to tell the audience that you and I are speaking minutes after<\/strong> Anthropic filed its S-1<\/strong><\/a>, and all of humanity is going to be turned into AI. Who knows what entertainment we\u2019ll be watching in the future?<\/strong><\/p>\n<\/div>\n There\u2019s a lot going on. Let\u2019s start at the very beginning of this. You have a new job since last time you were on the show. Last time, you were the head of Direct-to-Consumer \u2014 you were basically the head of Peacock and the other apps inside the family. Now you\u2019re the chairman of NBCUniversal Media Group.<\/strong><\/p>\n<\/div>\n What\u2019s the new job? What does that mean?<\/strong><\/p>\n<\/div>\n NBCUniversal Media Group is comprised of certain services within NBC. It\u2019s the broadcast network, it\u2019s Bravo, it\u2019s Peacock, it\u2019s NBC Sports. We also have NBC News<\/em> and Telemundo. One of the things that we recognized, especially when we spun off some of our cable assets last year into Versant, was that the assets we had truly worked better together. NBC has been like a megaphone. Given the reach of NBC, it\u2019s been incredibly strategic in growing Peacock, which is a bit ironic because I think so many people believed that broadcasting was a bit of a relic of the past in this digital world, but it\u2019s actually proven to be the opposite. As things have gotten more fragmented, having a broadcast network is actually a superpower because we\u2019re continuing to see ratings growth. That has been really helpful as we\u2019ve been building out Peacock.<\/p>\n<\/div>\n But actually, Peacock was also finding new audiences, like cord cutters or people who maybe didn\u2019t grow up watching NBC or some of our cable networks. So, Peacock\u2019s also been really strategic in reaching and driving people back to NBC and Bravo. So, I think that flywheel is where we recognized that we needed to start operating differently. I\u2019ve been a huge advocate of what I like to call \u201ccenters of excellence\u201d in how I like to structure the business, which is, content first and platform second. How do we get maximum reach, maximum engagement? That really required us thinking differently about how we were running the business.<\/p>\n<\/div>\n Essentially, instead of having a programming group within broadcast and a programming group within streaming, we just collapsed the business. Now you\u2019ve got one programming team, one marketing team, one product and technology team, one decision sciences and research team, and one advertising team. They\u2019re all incentivized around continuing to grow the portfolio, get that maximum reach, maximum engagement, and drive top-line revenue. I think that structure, which we put in place about 18 months ago, is contributing to a lot of the success that we\u2019re seeing now.<\/p>\n<\/div>\n Even if you look at 2026, NBC is the number one network in total viewers. We had an unbelievable early part of the year with \u201cLegendary February,\u201d which you might remember. That\u2019s when we had the Super Bowl, the Milan Cortina Olympics, and the NBA All-Star Game. In 17 days, we reached over 225 million viewers. This summer, we had Love Island<\/em>, which was the number one show of the summer for streaming. You had the World Cup, which was the number one Spanish-language sporting event in US history on Telemundo and Peacock. We had a show called The<\/em> Five-Star Weekend<\/em>, which was our number one scripted drama.<\/p>\n<\/div>\n Now, we\u2019ve led ourselves into the fall, where we have Sunday Night Football, which has been the number one show for 15 consecutive years. We had a great kickoff with over 25 million viewers. We just had the NBA tip-off last week with the Knicks and the Sixers, which is the number one rated tip-off in NBA history. So, it does feel like we\u2019re firing on all cylinders in how we\u2019re trying to operate with this, again, content-first-platform-second mantra.<\/p>\n<\/div>\n But just to go one level deeper, a big part of this strategy is figuring out how do we move audiences across platforms. For example, when I mentioned that Love Island<\/em> was the number one streaming show of the summer, 40 percent of those Love Island<\/em> viewers also tuned in to watch the World Cup. So, migrating viewers back and forth across the portfolio is a critical part of how we see ourselves continuing to grow. But to effectuate that, you need to structure yourself in a way where people are incentivized along that vision. We\u2019re still evolving as an organization, but I\u2019m really proud of some of the milestones and accomplishments that we\u2019ve made as a team. I love my job. I feel like I\u2019ve got the best job in the industry at the moment.<\/p>\n<\/div>\n It is a tumultuous time in Hollywood, and you seem like one of the happiest people in the industry right at the second. That is very notable. You\u2019re a<\/strong> Decoder<\/em><\/strong> pro, you brought up structure. I\u2019m dying to ask you about the Decision Sciences Group. That\u2019s the other question I ask everybody.<\/strong><\/p>\n<\/div>\n But let me just back out for one second. You\u2019re describing quite a lot of freedom in rethinking how something like NBCUniversal would work. You mentioned the Versant spin, so CNBC, MS Now, and a bunch of channels went that way. I\u2019m on its networks all the time. I would describe the folks at Versant as feeling more free. They\u2019re disconnected from the battleship that was Comcast and NBCUniversal. They can go try whatever they want to try. They\u2019re energized by it in some ways.<\/strong><\/p>\n<\/div>\n Then, Comcast looked at NBCUniversal and said, \u201cWe\u2019re going to spin off that off as well. We\u2019re going to be the cable business and NBCUniversal will be the entertainment business, and now you\u2019re in charge of that.\u201d You\u2019re like a 20-year Comcast veteran. I think you got your start doing cable boxes.<\/strong><\/p>\n<\/div>\n Yep. I started in 2004 at Comcast.<\/p>\n<\/div>\n Just tell me about that process. We spun off CNBC and MS Now into Versant. Now we\u2019re looking at this company. We ought to spin off NBCUniversal as well. Just tell me about how that came about. What was that moment like? Did you all sit in a boardroom? Did it come down from on high? How did that happen?<\/strong><\/p>\n<\/div>\n Well, that decision really was made by Brian Roberts and Mike Cavanagh. Candidly, I was not in the room when that decision was made, but I think if you were to ask people at NBCUniversal, it makes strategic sense.<\/p>\n<\/div>\n Do you feel that same sense of freedom?<\/strong><\/p>\n<\/div>\n You know what? I think that there\u2019s an energy. When people show up here, they feel very passionate about what they do. They believe in our strategy, they believe in our portfolio. Look at NBCUniversal more broadly. Before, I was describing the Media Group, but that is one piece of the broader company. You have Universal Pictures and Universal Television, which have obviously been having an unbelievable summer with The Odyssey<\/em> and Obsession<\/em>. You\u2019ve got Universal\u2019s theme parks and experiences. We opened up Epic Universe last year. We opened up a kids theme park in Texas. We announced we\u2019re going to open up a theme park in the UK<\/a>. We have Sky, which was part of the company but more squarely sat within Comcast Cable. Now that\u2019s going to migrate over to the new NBCUniversal as part of this restructure. Then, you have these media assets, which I spoke about earlier.<\/p>\n<\/div>\n So, you\u2019ve got this unbelievable portfolio. I think that people here really believe in our growth and that if we\u2019re a separate company, it\u2019s going to allow us to move faster. It\u2019s going to let us have more clarity around where we want to make capital allocations and decisions. There are a few areas that really play to our strengths as an organization. One of them is live sports and live events. That\u2019s always been a part of NBCUniversal that we\u2019re really known for. If you just look at the sports portfolio that we have, Nilay, we\u2019ve got NFL, NBA, MLB, the Big Ten Conference, the Premier League. We\u2019ve got the Olympics with the IOC. You\u2019ve got this unbelievable portfolio of sports content, and that\u2019s a strategic asset when we\u2019re partnering with the leagues because we believe in broadcast. We believe in broad reach. We\u2019re not trying to put everything exclusively on a streaming platform. In 2026, we\u2019ve demonstrated across almost every single sport that we can actually continue to grow ratings and reach new audiences, which is something that\u2019s becoming more and more complicated.<\/p>\n<\/div>\n Can I ask about that? Because you also run Peacock, which is a paid streamer where you can access sports. When you say grow ratings on broadcast, are more people putting up antennas to watch sports over the air?<\/strong><\/p>\n<\/div>\n No. What I mean… By the way, about 20 percent of TV households in this country do still use over-the-air antennas as\u2014<\/p>\n<\/div>\n Oh, we have lots of listeners who are going to tell you that\u2019s the best picture quality you can get.<\/strong><\/p>\n<\/div>\n Yeah. It is amazing picture quality, especially if you live in the right look angle where you could pick up the signal.<\/p>\n<\/div>\n It comes back to what I said earlier about managing as a portfolio. We don\u2019t think of it as a broadcast business sitting next to a streaming business. We really position ourselves as a digital-first company trying to get that maximum reach. When we look at the ratings, we\u2019re combining what you would think of as more traditional ratings for linear television with streaming and all of our digital platforms. Whether that\u2019s DVR or TV Everywhere, we aggregate it into one platform. When you look at it through that lens, which is just audience, we\u2019ve actually demonstrated that across almost every sport \u2014 NFL, NBA, or MLB \u2014 the total viewers that we are reaching now are, in some cases, the highest they\u2019ve been in decades.<\/p>\n<\/div>\n Even the Super Bowl, which we had earlier this year on NBC, reached about 137 million viewers at its peak, and that\u2019s across all of our platforms. That Super Bowl was the highest-rated live event in NBC\u2019s 100-year anniversary, which is this year. It\u2019s kind of counterintuitive, but what we\u2019re showing is that when we start operating as one, we can reach new audiences and we can aggregate them. We are demonstrating that not just across sports. There\u2019s even something like the Thanksgiving Day Parade, which has been an institution on NBC for 99 years. This past Thanksgiving Day Parade was the highest-rated parade we have had in the company\u2019s history. So, there\u2019s a renaissance happening around live. In a world of instant gratification, on demand, and watching what you want when you want, the fact that you\u2019re now seeing more and more viewers wanting the collective consciousness of social viewing, things that still matter in today\u2019s society, that actually plays to our strengths. And we\u2019re seeing that manifest itself with higher ratings.<\/p>\n<\/div>\n But as I mentioned, it\u2019s also a big part of our strategy. It was a big part of our Peacock strategy, which was a bit of an anomaly when we launched Peacock six years ago. It\u2019s also a huge part of what I think NBC does well, which is that we create these big tentpole events and we\u2019re able to shine a light on them and get huge audiences that are continuing to show up, even in a world of fragmentation and cord-cutting.<\/p>\n<\/div>\n It\u2019s interesting that you\u2019ve described it as content first and platform second, and then you\u2019re describing your approach to ratings as agnostic to distribution. You\u2019re just sort of combining everything and saying, \u201cThis is the number of people we reached.\u201d<\/strong><\/p>\n<\/div>\n Well, take something like the Milan Cortina Olympics. This is an interesting example. If you were to look at that Winter Olympics, we had roughly 3,200 hours of content. There\u2019s no way we can make all of that available on one network. There\u2019s no way to daypart 3,200 hours. If you remember what we did with the Paris Olympics, we made the decision to make every event available live. When you make it all available live, we put it all on Peacock. This was a very controversial decision because the question has always historically been that if people tune in to watch this live during the day on Peacock, are they going to tune in to watch NBC primetime? Are we going to cannibalize our ratings or are we going to grow the ratings? This is where we really tested this strategy. If we\u2019re truly indifferent, then what should happen is that we should be able to expand the funnel during the day, get more people into the Olympics, and try to create an experience that we\u2019re very proud of.<\/p>\n<\/div>\n We really do believe, whether it was the Gold Zone or Multiview, that we were able to surprise and delight viewers and make it really easy to navigate and find all of the choices on Peacock. But then what happened was that people were tuning in to watch NBC during primetime because there\u2019s a difference between what NBC does and what Peacock does. NBC was more about storytelling. It was more about, \u201cLet\u2019s talk about what happened today. What about the backstory of the athletes? How\u2019s Mike Tirico going to address his perspective on things?\u201d When you combine these two things together \u2014 putting all the content on Peacock and then having the primetime show \u2014 this Winter Olympics had about a 96 percent higher rating. About 25 million viewers were tuning in to watch the Milan Cortina Olympics, which was about 96 or 97 percent higher than Beijing. On the digital side, it was double the digital minutes of every other Winter Olympics combined. We also doubled the advertising revenue.<\/p>\n<\/div>\n You\u2019ve got to be willing to break some glass. This is going to seem so obvious, but it starts with the consumer. It starts with, \u201cHow do we approach the consumer and give them the best experience?\u201d And if you build it, they will come. The only reason I\u2019m using the Olympics as an example is because if you were to look at the past, this was a real pain point where we didn\u2019t make everything available on streaming or it was confusing for some viewers to figure out how to navigate all of the choices. We really, as an organization, decided to put our shoulder behind this, and I think the results ultimately speak for themselves. But again, it ladders back up to this vision of really starting to manage as one portfolio. If you can drive that maximum reach and engagement, that\u2019s also going to be where you\u2019ll get the best monetization.<\/p>\n<\/div>\n The Verge<\/em><\/strong> team in particular was<\/strong> addicted to Gold Zone<\/strong><\/a>, which was the whip-around coverage of every medal event. It was very fun.<\/strong><\/p>\n<\/div>\n Let me ask you about this. A big<\/strong> Decoder<\/em><\/strong> trope is that your distribution fundamentally affects what you make, right? That the medium is essentially the message, and I know what a YouTuber makes because they\u2019re on YouTube, and I know what a TikToker makes because they\u2019re on TikTok. I could stretch this all the way back and say I know what broadcast TV looks like because the medium of broadcast TV has fundamentally shaped the content that gets made there. I know what cable shows on Bravo look like, and they\u2019re not the same thing and they haven\u2019t been for a while.<\/strong><\/p>\n<\/div>\n You\u2019re describing, \u201cWe\u2019re going to bring programming in, we\u2019re going to centralize that, we\u2019re going to be agnostic to distribution \u2014 or indifferent I think is the word you used \u2014 and that\u2019s going to increase viewership.\u201d But the pressure of the different distributions is still there, right? Running the broadcast network over the air is still different and reaches different people than distributing on YouTube TV, than running Peacock as a paid platform unto itself. How do you manage that tension? Because it is real.<\/strong><\/p>\n<\/div>\n Yeah, it is very real. It\u2019s a really insightful question. The tension is real, but actually, I don\u2019t view it as tension. I view it as an opportunity because you\u2019ve got different audiences. If it\u2019s a Venn diagram and you look at who\u2019s the audience on broadcast versus the audience on cable versus the audience on streaming, there\u2019s some overlap, but it\u2019s not as much as you would think. That actually speaks to this broader strategy, which is, \u201cHow do we reach?\u201d If we reach all these different viewers but they\u2019re on different platforms, how do we start bringing this together into one?<\/p>\n<\/div>\n Now there\u2019s multiple ways to effectuate that kind of a strategy. One is you start sharing content and window content differently across platforms. For example, we have a show on Peacock called The Paper<\/em>. Greg Daniels created it, who also created The Office<\/em>. It\u2019s a really great comedy and it\u2019s an original. If you were to look at how streaming services typically make originals available, they\u2019re exclusive. You premiere it on your streaming platform, and it typically stays on that platform forever.<\/p>\n<\/div>\n What we\u2019re starting to experiment with is, well, what if we premiere The Paper<\/em> on Peacock but then introduce it onto NBC six months later? Now you\u2019re bringing a show that was created for streaming and making it available on NBC to a new audience. You also have this added message, which is that if you want to watch next week\u2019s episode now, go get Peacock. All of a sudden, NBC is not only reaching new audiences but it\u2019s also becoming a sales channel for driving people back to sign up for Peacock.<\/p>\n<\/div>\n Do you give that to Greg Daniels? The feedback loop of a YouTuber is so blunt. I\u2019ve made a handful of<\/strong> Instagram Reels<\/strong><\/a> in my life. I literally open and look at the retention chart and think, \u201cOh, I should put another hook in there in the middle to keep my viewers,\u201d and it\u2019s immediate. That\u2019s not even how my brain works. It\u2019s immediate that the data makes you think this way. If you say to Greg Daniels, \u201cHey, make sure episode two of<\/strong> The Office<\/em><\/strong> ends on a cliffhanger so that I can advertise watching the next episode right away on Peacock.<\/strong><\/p>\n<\/div>\n Well, Donna Langley, who oversees all of the entertainment programming, would be the one calling Greg Daniels and giving him that feedback. But here would be a different way to answer that question. I don\u2019t think we\u2019re necessarily trying to change the framework of how some of the shows are being created on NBC or Peacock. There\u2019s still something about premium content and how that\u2019s being created that I think resonates with a lot of people.<\/p>\n<\/div>\n But here\u2019s what we\u2019re thinking differently. Take a show like Saturday Night Live.<\/em> We had the 50-year anniversary for SNL a couple of years ago, and it\u2019s unbelievable what Lorne Michaels has created. You still have SNL<\/em> that\u2019s on at 11:30PM ET, but what if we now take that content and we format it for vertical video on Peacock? We know that there\u2019s a whole cohort of people that are watching on their phone, holding it vertically, and likely using their forefinger or their thumb to navigate because of TikTok or Reels. They\u2019re watching a show like SNL<\/em> on YouTube in some cases as well. Instead of trying to recreate or tell viewers how to watch the content, why don\u2019t we just take that content and reformat it in a way that\u2019s more akin to them? So now, you can go to Peacock and you can watch content in a vertical video format. That may not be for you, but it might be for somebody else who wants to swipe from sketch to sketch because that\u2019s how they enjoy it.<\/p>\n<\/div>\n Let me give you another example, which is sports. I mentioned earlier about how we tried to introduce new features around sports because it\u2019s such a passionate fandom. You can\u2019t change the way somebody watches an NBA game. People want to watch an NBA game in the way that it was produced, but the lines are getting blurred around what\u2019s a live event and what\u2019s a video game, especially if you grew up playing NBA 2K<\/em>. We\u2019ve introduced something called Performance View<\/a>, which is on Peacock. You could watch the NBA game or you can enable Performance View. If you enable Performance View, an overlay comes down on top of the game, and now it looks like a video game where we\u2019re pulling in real-time sports data from sports radar, calculating the probability of somebody making a shot, using graphical overlays to show the trajectory of the ball, or putting the names over the player\u2019s heads just so it\u2019s a little bit easier to follow what\u2019s going on.<\/p>\n<\/div>\n You\u2019re not changing the core production, you\u2019re enhancing it. The enhancement of all these types of tactics and features \u2014 whether it\u2019s through something like Performance View, something like I\u2019m describing with SNL<\/em>, or it\u2019s rethinking the windowing of the content \u2014 is allowing us to reach new viewers but also allow them to consume the content on their terms. And the way you watch may be different than the way I watch, and we\u2019re just trying to give viewers different choices to enhance their experience.<\/p>\n<\/div>\n One thing I always think about in terms of distribution is that every distribution channel is more or less valuable. The monetization is more or less lucrative. I can make 1 million Instagram Reels today and they will make me $0. But more people will see my face, and then maybe I will sell them a<\/strong> The Verge<\/em><\/strong> subscription, the<\/strong> Decoder<\/em><\/strong> book, or whatever it is in the future. That\u2019s the creator economy, right? It\u2019s 10 million little ad agencies. Instagram doesn\u2019t pay for the content, and they all have to monetize it some other way.<\/strong><\/p>\n<\/div>\n Then there\u2019s, I don\u2019t know, Peacock or Netflix where I pay a subscription fee and the content is there, so there\u2019s that monetization model. There\u2019s the movies. You can go and pay to watch one movie one time and that\u2019s going to be very lucrative for Christopher Nolan \u2014 maybe nobody else, but it\u2019s very lucrative for Christopher Nolan. Which one is most valuable for you? You\u2019re describing everything, but some have to make more money than others and some attract more new audiences than others. You\u2019re trying to bring people from the biggest audience to the most revenue.<\/strong><\/p>\n<\/div>\n I want to give a lot of credit to our ad sales team and Mark Marshall, who oversees ad sales. Several years ago we recognized that if you really want to have this kind of a strategy and vision (like I said, content first, platform second), you need to become almost agnostic around where the consumption is happening. We made the decision to actually sell as one portfolio. When you\u2019re buying advertising, we are combining the audiences across broadcast, cable, streaming, and digital, and that\u2019s how we sell it and go to market. That\u2019s actually been the way that we\u2019ve been doing this now for several years.<\/p>\n<\/div>\n Is advertising the number one line of revenue here? Because on cable, when you were part of Comcast where I\u2019m sure the rates were not as high as you could get now that you\u2019re split, Comcast just paid you carriage fees.<\/strong><\/p>\n<\/div>\n We are a dual-revenue stream business. Advertising is very much a material part of the overall revenue stream, not just of NBC and cable but of Peacock. If you remember, this was a big part of our strategy when we launched Peacock six years ago because the streaming market was very focused on ad-free, binge viewing, scripted dramas, and growing subscribers at any cost. That was the future. We zigged while the rest of the market zagged. We believed the white space was actually going to look more like broadcast television. From the beginning, we saw Peacock as an extension of the broadcast business instead of trying to build a standalone streaming business. If you look at it through that lens, that has influenced all of our programming decisions around live events and sports, and around why we wanted to have movies and scripted but also unscripted and news. The belief was that streaming was going to look a lot more like television.<\/p>\n<\/div>\n If the viewership moved to streaming, why wouldn\u2019t the advertisers move to streaming? Eighty percent of the subscribers on Peacock are on our ad tier, which is a higher mix of advertising subs than I think almost any other streaming service, but that\u2019s because of decisions we made six years ago. The platform that we built for Peacock was designed for live. When you see something like an exclusive NFL playoff game, the Olympics, or the NBA tip-off, the reason why our platform scales and why you\u2019re probably not talking about pixelation, buffering, long latency, or high app crashes is because we spent years doing nothing but wanting to harden the platform because we believed that we needed to build a live platform for scale.<\/p>\n<\/div>\n To your question, all of this kind of compounded itself. Whether you\u2019re watching something on NBC or Peacock, we sell it as one. That has allowed us to go to market in a way that I think really does allow us to punch above our weight when it comes to advertising and monetization. It\u2019s a critical part of our strategy. I think about 30 percent of our advertising revenue six years ago came from sports and streaming. Now it\u2019s probably closer to 60 percent of our advertising revenue is coming from streaming and sports. So, all of that gets aggregated as part of this broader portfolio approach.<\/p>\n<\/div>\n I\u2019m curious about the sports piece of it, the NFL in particular. The NFL just<\/strong> keeps getting<\/strong><\/a> more expensive<\/strong><\/a>. That\u2019s the business it\u2019s in. It\u2019s going to keep charging you more money for rights. I think all the other sports would like to keep getting more expensive. They maybe don\u2019t have the leverage the NFL seems to have. That made sense in a world of carriage fees. The NFL would say, \u201cWe\u2019re going to cost a lot of money. We\u2019re going to go out to broadcast networks.\u201d Then, the broadcast networks are going to turn around to their distributors and say, \u201cWell, if you want the NFL games, you\u2019ve got to pay what they cost plus our margin.\u201d Then, my price all the way at the bottom at the consumer end would go up, and my cable bill would go up. I think everyone understands that is the thing that happened for years and years.<\/strong><\/p>\n<\/div>\n That is unbundled, right? You are describing the unbundling of that entire business model. But the price of NFL rights, for example, keeps going up. A lot of analysts I talk to are basically saying, \u201cLook, at some point Amazon and Apple are the only companies that are going to have enough money to buy the NFL package.\u201d NBCUniversal \u2014 standing alone outside the Comcast revenue that would keep it afloat \u2014 is going to have to raise rates to some extraordinarily high level just to compete with the big tech giants that own the own streaming platforms and run them at a loss. That is very challenging mathematics, right? If your business is based on live, you\u2019ve got to stand up live events that people definitely want to watch. Sports is at the top of that list. The sports leagues know that, and they\u2019re going to keep coming at you with higher and higher demands. How do you manage that without making Peacock\u2019s price skyrocket?<\/strong><\/p>\n<\/div>\n If you look at our strategy (we\u2019re looking at this across our entire portfolio and our entire ecosystem), I think one of the benefits that we bring to the table with the leagues is that we\u2019re not looking to make the content available on just streaming or broadcast. It\u2019s both. That allows us to grow reach, which is a good thing for the leagues. I think all of that has to be taken into consideration when they\u2019re looking at how they want to go to market with their rights.<\/p>\n<\/div>\n I mean, we have a very long history with the NFL. It\u2019s a strong partner of ours. Sunday Night Football has been number one on NBC for 15 consecutive years, but we also entered into an 11-year arrangement with the NBA. As I mentioned, I think it\u2019s been very happy with the relationship. We\u2019ve been happy with the first year of the NBA relationship because it grew audience for us. It allowed us to manage how we\u2019re thinking about having a weekly cadence of premium sports on Sundays with the NFL, the NBA, and now the MLB. It\u2019s allowed us to grow more advertising. When the flywheel works, it allows us to partner with the leagues in creative ways.<\/p>\n<\/div>\n Everything has to be evaluated when you\u2019re looking at this, whether it\u2019s sports or entertainment programming. But I think of it like a mutual fund. What\u2019s the content that\u2019s going to drive acquisition? What\u2019s the content that\u2019s going to drive engagement? What\u2019s the content that\u2019s going to drive frequency? The answer to that question could change depending on where you are in the life cycle of your business. You might have certain content that\u2019s a loss leader, but it\u2019s adding value elsewhere in the portfolio. That\u2019s generally how we\u2019re evaluating when we\u2019re going into a rights negotiation.<\/p>\n<\/div>\n I\u2019ll give you another example of this. When we were launching Peacock, we entered into a relationship with the WWE. We thought that the WWE would be a really great addition to Peacock for a few reasons. I wanted to have something that was on every month. It\u2019s got their premium live events, which it does every month. That would create a cadence, which we thought was critical in streaming. How do you get somebody to open up your app? How do you build habituation? We thought the WWE could do that with premium live events. It also had a huge catalog of WWE programming, which gave us more tonnage. We were also able to look at the addressable market for the WWE and estimate what percent we thought we could penetrate. Then we know the CLV of a customer, so you can calculate the return on the investment when you\u2019re going to go after a certain rights package.<\/p>\n<\/div>\n For the listener, what\u2019s the CLV?<\/strong><\/p>\n<\/div>\n The consumer lifetime value. What\u2019s the Average Revenue Per Unit (ARPU), multiplied by the number of months that you retain a customer before they would churn. That\u2019s generally the formula that you would look at.<\/p>\n<\/div>\n The reason I\u2019m kind of laying it out this way is that if you\u2019re making decisions that are longer term, you\u2019re thinking about how does this fit into a broader portfolio view. In the case of the WWE, it was actually a real win-win because we acquired subscribers through the WWE. I think the WWE was happy with it because we were also able to bring in new viewers to sample and experience it. But when that deal came up for renewal, tthe license fees went up pretty dramatically, and it ended up going to another streaming service. We were actually okay with that because what we really focused on was how to take those WWE viewers and habituate them. What we found was that WWE fans really like The<\/em> Fast and the Furious<\/em>. They really like Yellowstone<\/em>. They like other stuff.<\/p>\n<\/div>\n [Laughs]<\/em><\/strong> I\u2019m sorry, did you need to open the spreadsheet and figure that out or did you just intuit that one?<\/strong><\/p>\n<\/div>\n [Laughs]<\/em> Well, we have assumptions, but you have to test these hypotheses.<\/p>\n<\/div>\n The elegance of this strategy for us was that what we were really calculating, well, if I don\u2019t renew this content, how many subscribers can I retain? We were able to retain the majority of those subscribers. We ended up licensing a much smaller package of WWE programming. We were able to retain those subscribers because we had habituated them into other content. Then, we took the money that we were utilizing to license the premium live events, and we reallocated it into other parts of the portfolio.<\/p>\n<\/div>\n That\u2019s the mindset for how we are approaching these deals. If the economics make sense, they make sense. If the economics don\u2019t make sense, then we look to how we reallocate that investment into other parts of the portfolio and try to find a comparable or better return. It\u2019s an evolving, living, breathing strategy and approach for how we go to market when we\u2019re looking at any type of content, whether it\u2019s sports or entertainment.<\/p>\n<\/div>\n You\u2019ve brought me to the other<\/strong> Decoder<\/em><\/strong> question. I think you\u2019ve talked a lot about structure already. The other question I ask everybody is how they make decisions.<\/strong><\/p>\n<\/div>\n You oversee a group called the Decision Sciences Group. You are describing a lot of decisions that take time to pay off, right? This is a strategy you set ages ago when you bet on live. You built a platform around it. You\u2019re saying the flywheel is spinning now. How do you make decisions? What\u2019s your framework, and how does that decision sciences group play into it?<\/strong><\/p>\n<\/div>\n It\u2019s interesting. When I came to NBC, there was a research department, which did what I think a lot of media companies would focus on. They would look at the ratings and the demographics and take more of a traditional approach to how they\u2019re measuring performance. That, to me, is different than the muscle that I think we needed to build inside of NBCUniversal, which was, \u201cNo, I need to better understand what drives acquisition, what drives engagement, what drives frequency, what drives retention or what causes someone to churn. What\u2019s the propensity for somebody to upgrade? What\u2019s the propensity for someone to downgrade?\u201d These are very different skills.<\/p>\n<\/div>\n When I talked about early on having centers of excellence, at one point there were two different groups: one doing research and one doing decision sciences. I would go into meetings, and they would have two different conclusions around how certain things were performing because they were evaluating them differently. One group might say, \u201cHey, this is doing really well because we grew the audience.\u201d Then, the other group would say, \u201cNo, it missed its mark on the paid subscriber additions, and it\u2019s not generating the right return.\u201d<\/p>\n<\/div>\n The solution was to bring them together as one team. It\u2019s managed by Will Gonzalez, who has done an unbelievable job in managing this as one holistic decision sciences and research team. When we were building Peacock, we were maybe at a grade school level of sophistication, if I\u2019m being a little cagey about it. I think we\u2019re now at a graduate school level. The sophistication of this team and their ability to predict and forecast across multiple different KPIs is just unbelievable.<\/p>\n<\/div>\n Donna Langley really oversees all the greenlighting for entertainment, but when we partner together across all of these decisions, we are looking at multiple variables, whether it\u2019s paid subs, advertising, or what is the brand benefit. What is the cohort for this content and what other content do we think this cohort may watch on the platform? What do we think that this does to the frequency or the habituation? There are multiple KPIs that we\u2019re evaluating when we\u2019re greenlighting a show.<\/p>\n<\/div>\n It also comes back to who are the audiences we\u2019re trying to reach. One of the things that we\u2019ve been able to do is… We\u2019re not trying to cast a broad net and be all things to all people. We\u2019re not a flea market. We\u2019re trying to be very purposeful around how we super-serve the fandoms and the franchises that we think play to our strengths. A lot of the decision-making is around how do we grow those audiences? I wouldn\u2019t say that the decision sciences and research teams are the decision-maker, but they are providing us the information to make better informed decisions.<\/p>\n<\/div>\n There\u2019s still an art to the science, and so in my opinion, you don\u2019t want to swing the pendulum so far that you\u2019re just using data to make predictions. I think that there\u2019s a real skill around understanding the creative process, but then how do we utilize something like decision sciences and research to make better strategic bets? That\u2019s something you\u2019re not going to get right every time, but we\u2019ve done a pretty good job, in my opinion, in building out our portfolio and predicting where we thought the market was going to go.<\/p>\n<\/div>\n We predicted that the market was going to move towards bundling. I talked about that in 2019, where I said this great unbundling of cord-cutting is likely going to give rise to a great re-bundling of streaming. I saw a lot of data that drew me to that conclusion. When we were building Peacock, I was not building Peacock to win a streaming war. I was building Peacock for growth after<\/em> a streaming war. Where do we think the market was going to be? If you look at where we are now, where you\u2019ve got the market that\u2019s shifted more towards wholesale bundling and towards advertising where almost every streaming service is now ad-supported with a tier. You\u2019ve got this real focus now on live events and driving content, whether it\u2019s unscripted content or various dayparted content. I would argue that a lot of what streaming looks like today is replicating a broadcast network: There\u2019s a broad household demographic where there\u2019s something for everyone in the home with a dual-revenue stream. That market is moving towards bundling \u2014 the more you get, the better the price \u2014 which is exactly how the cable industry was built.<\/p>\n<\/div>\n Everything old is new again. I think this is back to the future, but we designed ourselves in a way where we bet that\u2019s where the market would go. Equally important, we believed that would at least play to our strengths, and that\u2019s what would work for us at NBCUniversal.<\/p>\n<\/div>\n How do<\/strong> you<\/em><\/strong> make decisions? What\u2019s your framework?<\/strong><\/p>\n<\/div>\n Well, my framework involves looking at the hallmarks I mentioned earlier: How do we drive reach, engagement, and monetization? Those are some of the most critical components. When I project out over the next several years, if there\u2019s a streaming war, so to speak, I don\u2019t think it\u2019s going to be around subscribers or reach. It\u2019s going to be about engagement. It\u2019s going to be about how to grow share of time. How do you grow share of time when there\u2019s only 24 hours in a day and the average consumer spends five to six hours a day consuming media \/ video? That number\u2019s been pretty consistent over the past decade.<\/p>\n<\/div>\n How we consume that media is obviously very different, especially based on where you are demographically. As more people are spending time on social media, user-generated content, gaming, podcasting, what are the things that we need to do to continue to grow share of time? I know the value of one extra hour per user per month, so a lot of my decisioning is around how to grow that share of time. That\u2019s where everything hangs off of the monetization, the retention, and, ultimately, how I see ourselves continuing to grow as a portfolio.<\/p>\n<\/div>\n![\"\"](\"https:\/\/platform.theverge.com\/wp-content\/uploads\/sites\/2\/chorus\/uploads\/chorus_asset\/file\/24792604\/The_Verge_Decoder_Tileart.jpg?quality=90&strip=all&crop=0%2C0%2C100%2C100&w=2400\"\/)
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