NBCUniversal is preparing to launch a subscription digital comedy service aimed at millennial viewers who watch hours of entertainment on digital devices rather than the old-school TV.
NBC's proposed over-the-top service is expected to launch later this year, according to two executives familiar with the plans who asked not to be identified because the initiative is in its early stages.
Television broadcasters increasingly recognize that dramatic changes in consumer behavior soon will strain their lucrative business model.
Consumers with smartphones and tablets, particularly younger consumers, have embraced digital apps as quick and convenient conduits to a specific service, such as making a plane reservation or watching videos on YouTube or Netflix.
NBC would become the latest broadcaster to introduce its own subscription video-on-demand service. Last fall, CBS rolled out a $5.99-a-month subscription service called CBS All Access that enables viewers to stream top entertainment shows, such as "The Big Bang Theory," "NCIS," and "CSI: Cyber."
HBO separately is planning an over-the-top service to launch later this year. HBO has said its planned service would target consumers in more than 10 million U.S. homes without a pay-TV subscription.
And last month, Nickelodeon, the children's network owned by Viacom, introduced its own commercial-free service called Noggin that is aimed at preschoolers. The Noggin channel is being offered for $5.99 a month.
The NBC comedy channel subscription is expected to cost about $2.50 to $3.50 a month. It could offer such shows as "The Tonight Show with Jimmy Fallon," "Late Night with Seth Myers," and "Saturday Night Live."
However, NBC executives developing the service have not formalized which of the network's comedy shows would be made available on the service, according to one person familiar with the plan.
The Wall Street Journal first reported NBC's plans to launch a comedy channel.
Last week, NBCUniversal Chief Executive Steve Burke told investors that his company was not getting adequately paid for views of some of NBC's most popular shows because so much viewing is online.
"We think about 70% of the views of Jimmy Fallon and the 'Tonight Show' occur online, and the majority of those views are unmonetized, completely unmonetized," Burke told Wall Street analysts during a Comcast earnings call.
"So here you have one of the hottest shows on television where 70% of the views are in an area that we don't get credit for," Burke said.
The comedy channel would seek to change that equation.
Evan Shapiro, the recently hired executive vice president for NBCUniversal digital enterprises, is leading the effort. Shapiro previously was president of Pivot, the entertainment enterprise owned by Participant Media, and before that, Shapiro ran the IFC channel.
In announcing Shapiro's appointment in early December, NBCUniversal said he would "work on the company-wide strategic development of digital opportunities to reach emerging audiences, including alternative platforms and direct-to-consumer distribution models."
The proposed comedy channel would seem to be in direct competition with Hulu, the groundbreaking ad-supported video-on-demand service that NBCUniversal launched in 2008 with Fox. Walt Disney Co. later joined the Hulu ownership group; the three media companies each own a third of the venture.
At the time, the thinking was that one online video service could super-serve the audience -- rather than a piecemeal approach with the various networks each offering separate subscription services.