Bloomberg had a terrific title yesterday when describing the cash flow troubles that have befallen MoviePass, which continues to burn unprecedented amounts of cash and is on the verge of insolvency as a result of its “business model” which loses money on every single transaction: “MoviePass CEO Hopes Subscribers Will Use Service Less Frequently.” Because what self-sustaining company wants its users to use its services more…
It now appears that the guys in the NBC Universal biz dev team also read that article and a lightbulb went off above their heads, because according to the Information, as the US cable giant hopes to steal away market share from Netflix and Amazon, it has come up with a novel idea: paying customers to use its service.
The battle to win over viewers online may be reaching new levels of intensity. Comcast’s NBCUniversal is considering the launch of a streaming service that would pay people to watch it.
The tentative name for the service is Watch Back and it would feature episodes of TV shows and web series from NBCUniversal’s own TV networks—like NBC, USA and Bravo—as well as those from outside web sites. To entice people to watch, Watch Back viewers would earn points that could be redeemed for gift certificates, according to several people with knowledge of the plans.
The Information also notes that the service would not have exclusive content and be more of a marketing effort, at least initially, although depending on its success to entice viewers that toom ay change.
While there are no details on what the pricing structure would look like – whether customers will pay a flat fee and get money back or if the service will be free with incremental upside depending on TV time – the deflationary impact of this approach, should it be brought to fruition will be dramatic, and may result in substantial revisions to market share of the coveted online streaming market. And then one wonders if Disney, which is rolling out its own “Netflix Killer” will follow suit.
In any case, the NBCU proposal implies that many headaches are in store for Reed Hastings and his streaming juggernaut which already has nearly $10 billion in annual content costs alone, as he struggle to offset not only the recent slowdown in user growth, but a revolutionary reversal in the payment structure of TV viewing, where advertisers will effectively be now paying viewers for their TV time.
That said, the market does not appears too worried, and Netflix stock has yet to react to the news.
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Author: Tyler Durden