Why NBCU is testing an ad-free streaming service

And so with Shapiro as its first employee, NBCUniversal created NBCU Digital Enterprises, a startup-like unit with offices in New York’s Soho neighborhood, away from NBCU Midtown headquarters. Ten months in, Shapiro now oversees a team of almost 20 people that’s preparing for the launch of its first consumer product: an ad-free comedy subscription streaming service called Seeso.

There are benefits to being a small, focused startup-like team inside a giant organization, according to Shapiro. While he oversees teams devoted to product, business deals and operations, marketing and programming, the unit is also supported by the corporate infrastructure at NBCUniversal, which assists with things like business affairs, human resources and IT.

This frees up Shapiro and his team to focus on the mission at hand. “We’re a truly modern division inside a huge, historical business,” said Shapiro. “We are seen as a resource and a leading indicator [about what’s happening in media] for the other businesses here.”

And one of the things happening in media is the growing presence of subscription services that do away with ads. It’s not just Netflix anymore; even Hulu and YouTube have ad-free options.

Seeso, which will launch in beta in December, is the product of an intense research initiative that involved 20-minute interviews with more than 10,000 people on what their media habits and interests were. What the Digital Enterprises unit learned was that there was serious interest in an ad-free subscription video service focused on comedy, at the optimal price of $4 per month.

In terms of content, Seeso has been spending millions on commissioning original content and licensing popular Web series, films and TV shows. It will have more than 20 original series and specials in its first year. From within the NBCU family, it will feature all of the late-night shows including Jimmy Fallon, Seth Meyers and all 40-plus years of “SNL.” Classic films and TV shows such as “Dazed and Confused,” the entire Monty Python film and TV library, “Kids in the Hall” and “Fawlty Towers” will also be in there.

A lower price and a focus on a specific genre is not the only way Seeso will differ from the mass-market streaming services like Netflix and Amazon. The service is taking an interesting approach to entice people who might not immediately want to pay: unlimited, free access to the service with no credit card required. The only catch? Free users will only be able to sample 10 to 15 percent of the service’s entire library. If they want to watch it all, they’ll have to pay.

“Even though OTT is relatively young, it has already fallen into these patterns,” said Shapiro, referring to the common practice of offering a week- or month-long free trial (while also getting the user’s credit card information) before the subscription kicks in. “The idea that you need to put a credit card in to get a free trial is stupid. It’s trickery. It’s companies hoping you forget.”

The thinking goes: When consumers are asked for only their email and are served with free, new content every week, “it’s only a matter of time before we convince you to subscribe, especially at $3.99,” said Shapiro.

The executive wouldn’t disclose how much subscription revenue NBCU hopes to pull in with Seeso, just “a shit-ton.”

Image via Steve Cukrov / Shutterstock.com