NBCU Threatens to Pull Apps From Roku Devices in Escalating Peacock Standoff

Key Insight:The disagreement, which comes down to advertising inventory, reflects the changing reality of distribution deals as consumer viewership shifts to OTT. The ongoing standoff between Comcast-owned NBCUniversal and Roku is intensifying—and could lead to NBC apps and programming disappearing from Roku devices as soon as this weekend. Roku informed viewers in a notice this morning that Comcast may revoke Roku’s access to dozens of NBCUniversal apps, including NBC, local stations and Telemundo, on its network of devices as soon as that same day. Those TV Everywhere channels, normally authenticated through cable TV credentials, give Roku users the ability to stream NBC channels directly, without the need for a cable box. "Comcast informed Roku that they plan to take away consumers’ access to NBCUniversal’s TV Everywhere channels on the Roku platform," Roku said in the note to customers. "This is deeply disappointing and the wrong way to treat subscribers, many of whom are Comcast customers, who pay to access these channels via their cable TV subscriptions and now will no longer be able to view these TV Everywhere channels on Roku, their platform of choice." The feud hinges on the lack of availability of NBCUniversal’s fledgling streaming service Peacock on Roku devices. The primarily ad-supported streaming service has not been accessible on either Roku or Amazon Fire TV—two of the country's biggest streaming platforms—since Peacock’s July 15 national debut, and the companies still have not reached an agreement. “Comcast is removing the channels in order to try to force Roku to distribute its new Peacock service on unreasonable terms,” a Roku spokesperson said. "While the NBC TV Everywhere apps represent an insignificant amount of streaming hours and revenue on our platform, we believe they are important to those consumers who use them, especially when so many Americans are at home." NBCUniversal and Roku’s distribution deal governing NBC TV Everywhere's availability on the platform expired in August, and the companies have been in negotiations for several weeks. NBCUniversal brought Peacock’s availability into the discussion as part of the deal’s renewal, and is calling Roku’s terms unfavorable. “Roku’s unreasonable demands ultimately hurt both their consumers and their consumer equipment partners to whom they’ve promised access to all apps in the mark. We are disappointed Roku is removing its users’ free access to NBCUniversal programming—11 network apps, 12 NBC Owned Station apps, 23 Telemundo Owned Station apps—and continues to block access to the only free premium streaming service available in the market, Peacock," an NBCU spokesperson said. "Roku’s unreasonable demands ultimately hurt both their consumers and their consumer equipment partners to whom they’ve promised access to all apps in the marketplace." The ongoing feud hinges primarily on who gets to monetize the available advertising inventory on Peacock, a primarily ad-supported service. Roku’s normal terms with other ad-supported apps on the platform require that ad-supported channels provide 30% of their ad inventory to Roku to monetize, and that percentage has become the main point of contention. At one point in the discussions, Roku was also seeking content for the Roku channel, according to a person familiar with the discussions. The escalating feud underscores the complexity of distribution deals that govern the future of television viewership. While distribution deals are typical for legacy television companies looking to distribute their channels far and wide, the financials of streaming change things. (HBO Max, from another legacy television company WarnerMedia, is also at an impasse with both Roku and Amazon Fire TV.) NBCUniversal has boasted of Peacock’s low ad load, of a max of five minutes per hour of programming, so each second of ad inventory is more precious. Introducing multiple ad sellers into the mix may also complicate frequency caps, which NBCUniversal has also advertised as a selling point for its streamer. Roku, according to a spokesperson, offered to extend its existing deal on TV Everywhere channels as it was previously negotiated so that those apps could remain on Roku platforms. “Comcast has declined our extension offer and so far has also refused fair and equitable business terms for the distribution of Peacock—despite the fact that they stand to generate hundreds of millions of dollars in advertising revenue from its distribution on the Roku platform,” the spokesperson said. Distribution on Roku gives entertainment companies like NBCUniversal access to its vast user base, which was at 43 million active accounts as of Roku’s most recent quarter. If the apps are deleted from Roku devices, they will need to be reinstalled. Peacock, as of last quarter, had generated 10 million sign-ups, but that number has climbed to 15 million, Comcast CEO Brian Roberts said earlier this week at the Goldman Sachs Communacopia Conference.