In this podcast, Motley Fool analyst Tim Beyers and host Dylan Lewis discuss:
- Comcast’s push into the ad market with the Universal Ads platform, and what it means for other players in streaming video advertising like The Trade Desk.
- Disney‘s plans with Fubo and its next act in sports streaming bundles.
Motley Fool host Anand Chokkavelu talks with Dan Caplinger and David Meier about sports technology company Sportradar.
Dylan Lewis: Is cable coming for streaming and ads? Motley Fool Money starts now. I’m Dylan Lewis; I’m joined over the airwaves by Motley Fool analyst Tim Beyers. Tim, thanks for joining me.
Tim Beyers: Thanks, Dylan. Not quite caffeinated today, because it’s not a caffeine day, but I’m still ready to go.
Dylan Lewis: You’re still bringing the energy, with the caffeine-free Monday. It’s always a coffee morning for me, Tim. It might be a hot cocoa afternoon with the snow that we’ve gotten here in Washington, DC. I’m very excited, I am in the winter spirit, but we have plenty to talk about before I can go frolic out there in the white stuff.
We got our first preview of some of the things that will be coming for the consumer electronics show and what’s going on in the state of tech streaming this week. Ahead of the trade show, Comcast announced its new ad-buying platform, Universal Ads. The company will be using its own properties in a hope to simplify the ad buying process in particular for small and medium sized businesses. Tim, I feel like there’s already a company that does a little bit of ad buying over streaming video.
Tim Beyers: There is. You might have heard of it. It’s called The Trade Desk. Boy, I don’t mean to sound cynical, Dylan. But does this not sound like a money grab?
Dylan Lewis: It does.
Tim Beyers: This totally sounds like a money grab. It’s not necessarily a bad thing, although we don’t really know too much about the details of this. But here’s why I say it’s a money grab. We have a lot of different companies that are competing to be the provider of record of advertisements once they’ve got your data. The argument is, Hey look, you’re here, we’ve got your data, we know best how to serve you, so we’ll be the ones that serve ads to you. This has gone back a long time. But probably the biggest benefactors of this shift in recent years have been Amazon built a huge advertising business, because, hey we know you’re buying habits. You should come advertise inside the Amazon platform, and that has become a big business. Walmart is another one that has profited from this. At the same time, I find it a curiosity, Dylan, that this has come really just like two months after The Trade Desk decided to say, Hey we’re going to create a connected TV operating system for devices, because everybody else has this self-interested. The Amazon Fire, they have their own content. They’re not Switzerland here. We’ll be Switzerland.
We’ll give you an open platform here. Everybody wants a piece of this pie, Dylan. Is Universal Ads going to be materially better? Is it going to be more simplified, which is the pitch here? I don’t know if that’s true. Well, I have a strong suspicion, I should say, that Comcast seized the margin opportunity and has decided to seize it.
Dylan Lewis: It does feel a little bit like they’re doing the Apple thing of, Hey, we didn’t need to be first to this, but we saw how you were doing it and we like how it looks, and we think we can get some margins doing it, so we’re going to do it too. I suppose if you’re someone who wants to advertise and you want to advertise on their programs, it doesn’t really matter whether you want a Switzerland-type relationship, you are going to have to play on Universal Ads if that’s the only game in town for getting onto their channel.
Tim Beyers: Well, it’s not clear to me that they have said it’s the only way to do it, but it certainly feels like this is going to be the primary way, and there may be some strong incentives to go through Universal Ads. But it’s a dangerous game to make it the only avenue, especially when the government has its eye on portals, which has been a thing. The government has been very conscious of portals, and without making any political statements here, one of the commonalities between the outgoing administration and the incoming administration is that both have been, let’s say looking somewhat askance at Big Tech. They have not necessarily been buddy buddy. We shouldn’t presume that the next administration is going to be any more interested in giving free license to tech companies, big mergers. I think anytime a company decides to exert portal control, you may be inviting scrutiny you don’t want.
Dylan Lewis: I think one of the interesting things is, Comcast is very much seeing what’s happening in Big Tech and saying we’d like a piece of that and we’d like to be able to have our own version of that. They, in the grand scheme of advertising, look at a Facebook or a YouTube and say, they have 10 million advertisers, and we have several thousand advertisers when it comes to people who are across NBC Universal. They clearly feel like they are a small player in this space, even though they are maybe able to possess the relationship in a way that those other players maybe couldn’t for their own content.
Tim Beyers: To be fair, we are also talking about lots of different ways. One of the things that’s probably going to be true about 2025, that makes this an interesting time to be trying something like Universal Ads, is that we are seeing new bundles, new ways of getting things. I personally right now don’t have access to generalized cable, but I have access to Peacock, and I have access to Paramount +, and honestly, I have access to YouTube, and YouTube gives me most of what I want, because most things are available later on YouTube. You know what? I’m fine with that.
Dylan Lewis: You’re fine with waiting, Tim? You don’t mind waiting around?
Tim Beyers: I don’t mind waiting around.
Dylan Lewis: You mentioned Peacock, and I want to get an alarm meter from you on this for The Trade Desk and for trade desk shareholders. I’m asking selfishly, because I am one here. Trade Desk was going to be one of the people selling NBC Universal’s Peacock, I think that was announced back in 2021. They have been one of several companies that have been selling inventory there, I think, for the last couple of years. We don’t know a lot of the details of this yet, but when you see this news, how big of a deal do you think this is for The Trade Desk?
Tim Beyers: I don’t know how big of a deal it is for The Trade Desk, but I do think the ground is shifting a little bit in terms of who’s going to own the brokering relationship for putting ads out into the market. That seems to be undetermined at this point. Now, to be fair, I do think there is a big market for an independent broker that can provide good data, fair pricing, transparent pricing. I think the market needs that. I don’t see them being disrupted by this, but I think the desire for companies and now Comcast is another one of them do take greater control of the customer relationship and leverage that customer relationship. That’s going to be something that The Trade Desk is going to have to work through, don’t underestimate how much of this has to do with Netflix envy. I wouldn’t be surprised if this is Netflix envy, Dylan, not at all.
Dylan Lewis: They’re saying, you innovated in this space, you created the category, you’ve got a successful business there rolling out the ads. We want a part of that. We want the membership model, we want the ad revenue, we want it all.
Tim Beyers: Absolutely, we want a piece. Don’t ever underestimate envy as a motivating factor, for sure.
Dylan Lewis: Sticking with streaming, Comcast is not the only one making moves this week. Disney also apparently nearing a deal to bring Hulu + Live TV together with Fubo. This is a smaller streamer that is known for its sports content. The focus on sports here maybe not necessarily a surprise because Disney has been developing venue sports with Fox and Warner Brothers, and Fubo has been a thorn in their side as they’ve been trying to do that too.
Tim Beyers: In fact, they sued over it. A judge had actually blocked the launch of a venue. Fubo did was starting to get some traction here from that lawsuit. This is according to the Wall Street Journal, that the judge said that the deal, this new bundle would substantially lessen competition and restrain trade. Not great. The partners in Venue, which are essentially the partners in Hulu and the Hulu Live + TV service have appealed the decision, but now it does look like, by virtue of an acquisition or a merger, I guess, it would be in this case, you can make that litigation go away. It is interesting. This is what I said previously. We are talking about different types of very specialized bundles showing up. Streaming, it makes your ability to make a bundle that fits you a little more compelling. Like I said, in this case, my bundle is YouTube, free, I pay for it with ads, and then cheap Peacock and Paramount +. I get a fair amount of sports ball, which I want, and I get some decent TV programming, and I get plenty of movies. I’m good. The only other one I’ve added to that is Netflix, I added that recently.
As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don’t buy sell anything based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Motley Fool only picks products it personally recommend friends like you. For today’s, show, I’m Dylan Lewis, we’ll catch you tomorrow.
