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Comcast’s New Streaming Service to Help Boost Ad Revenue

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Comcast to boost ad revenue

Comcast’s (CMCSA) new streaming service under its NBCUniversal division is likely to bring in advertising revenue for the company. As noted by NBCUniversal’s CEO, Steve Burke, in a CNBC report, the division’s streaming service will air around three to five minutes of ads per hour of programming. As a result, NBCUniversal is likely to make advertising revenue of $5 per user per month from the streaming service.

However, Comcast will offer an ad-free tier for an extra fee, as research shows that subscribers prefer services with fewer ads.

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Cost of different streaming services

NBCUniversal’s streaming service is likely to gain market share from rival streaming service providers, as there’s no long-form, ad-supported streaming service in the space. NBCUniversal’s ad-supported streaming service won’t cost a penny for customers who subscribe for pay-TV services. Meanwhile, it will cost ~$12 per month for customers without a cable subscription.

In comparison, Hulu’s wide array of programming starts at $8 per month but has regular ad breaks. Netflix’s (NFLX) plans range from $8 to $14 per month and have long-form content. The content of Alphabet’s (GOOGL) YouTube is short form and is generated by users. Ads also support it.

Ad revenue to boost Comcast’s revenue growth

The ad revenue generated by NBCUniversal’s streaming service is expected to add to Comcast’s revenue growth. Comcast has been generating impressive annual revenues, though its growth rate has been falling every year. In 2017, Comcast’s revenue rose 5.5% YoY (year-over-year) in 2017, while it rose 7.5% YoY and 7.9% YoY in 2016 and 2015, respectively.

In the third quarter of 2018, Comcast’s revenue of $22.1 billion reflected a rise of 5% YoY driven by the improved performances of its business segments. While its cable communication revenue improved 3.4%, its NBCUniversal revenue rose 8.1% YoY in the quarter.

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