Will NBC 2.0 Pay Off For Digital?

When NBC Universal announced NBC 2.0 last week, the General Electric business declared it would “enhance ongoing efforts to redirect traditional analogue resources toward high-growth digital areas.” That may be easier said than done.
Though NBC touted its “360 degree” digital offerings during the upfronts, many of its offerings are still too new to be earning much money, according to a report in Advertising Age. Some, such as CNBC.com’s subscription service, have yet to launch, The trade publication estimates the upfront committments to NBC’s digital properties at $250 million and expects them to reach $1 billion by 2009. NBC Universal head Bob Wright told WSJ that the company plans to spend $150 million on new digital projects through 2008.
Part of NBC’s planned $750 million in cuts are coming from programming, including the consolidation of news production. The network is only going to put on low-cost reality and game shows on during the 8 p.m. hour. Some advertisers argue that NBC’s emphasis on cheaper programming in prime time may also hurt the digital business. MindShare Interaction’s Jeff Ratner told Advertising Age that cuts in creative development may lead to lower sales on iTunes where the network’s “The Office” is one of the most downloaded shows. John Rash of Campbell Mithun says that people may not watch the scripted shows if the lead-ins are week.
NBC’s push to cut costs isn’t suprising. General Electric higher-ups no doubt want to see better performance from NBC Universal, which was the only General Electric business to show a decline in the last quarter. How the other networks respond or don’t respond to NBC’s moves will be interesting to watch.