NBC’s Peacock Bets Viewers Will Watch Ads to Stream for Free
(Bloomberg) -- Peacock, the upcoming online-TV service from Comcast Corp.’s NBCUniversal, is a bet that offering something for free will help the company stand out from a pack of streaming rivals.
NBC announced on Thursday that there will be three tiers of the new platform: a free option supported by ads, another version with more programming for $4.99, and a level with no ads that costs $9.99.
The idea is to hedge an expensive foray into streaming by relying on advertising revenue -- something rivals, including Netflix Inc., Walt Disney Co.’s Disney+ and Apple Inc.’s Apple TV+ -- have avoided.
Peacock -- along with AT&T Inc.’s HBO Max, which will debut in May -- is a relatively late entrant in the burgeoning market. But it has an inside track to market the service to existing Comcast cable customers, and the free tier gives a risk-free option to other consumers who may wonder why they need yet another streaming service.
The company hopes the strategy can let it reach 30 million to 35 million active accounts by 2024. (Even then, it will still be well behind market leader Netflix, which has more than 150 million subscribers.)
At a presentation at Rockefeller Center in New York, NBC executives highlighted the importance of not overcharging for its service. HBO Max, in contrast, will cost $14.99 a month.
“We already see growing customer price sensitivity and it will only get worse during an economic downturn,” Steve Burke, chairman of NBCUniversal, said at the event.
Burke added that NBC had long been frustrated by the fact that most on-demand viewing of its shows happens on third-party platforms like Facebook and YouTube, where NBC doesn’t get the same advertising revenue as it does on its own platforms. Peacock will help address that.
To avoid frustrating viewers, Peacock will have no more than five minutes of commercials per hour. State Farm Life Insurance Co., Target Corp. and Unilever will be among the first set of advertisers.
Comcast plans to spend $2 billion over the next two years on the streaming service and expects it to break even by its fifth year. The approach mimics the deep spending of rivals such as Disney and AT&T, which are pouring billions into their platforms as well -- and don’t expect them to be profitable until later in the decade.
The Peacock service, named for the longstanding NBC logo, will launch April 15 to Comcast customers and then roll out nationwide July 15. That’s just before the start of the Summer Olympics, which NBCUniversal’s networks will air.
The premium version of Peacock, which ordinarily will cost $4.99 a month, will be available at no cost initially to subscribers of Comcast and Cox Communications Inc. NBC executives say they hope to strike distribution deals with other pay-TV operators as well.
Those two cable companies have over 24 million subscribers, and users will have access to twice as many hours of content as they would with the regular free version. That includes sports offerings like soccer’s English Premier League and early access to late-night talk shows. For example, Peacock subscribers will be able to stream episodes of “The Tonight Show Starring Jimmy Fallon” and “Late Night with Seth Meyers” a few hours early each day.
By making a version of the product free, NBC is hoping that Peacock will have a leg up on its streaming competitors and reach a large subscriber base quickly. It also reflects the fact that Peacock is owned by Comcast, the largest U.S. cable-TV provider, which can use a free streaming service to tout its other offerings.
The service will have programming from the Summer Olympics, which begin in late July in Tokyo, including live coverage of the opening and closing ceremonies and daily Olympic shows.
Peacock will have more than 600 movies and 400 series, including reruns of NBC shows such as “The Office” and “Parks and Recreation,” as well as a slate of original programs. It will also stream the “Law & Order” and “Chicago” shows created by Dick Wolf and have exclusive streaming rights for Universal films, including “Fast & Furious 9” and “Jurassic World 3.”
The arrival of Peacock comes during a period of transition for NBCUniversal. Burke stepped down as the chief executive officer on Jan. 1, handing the reins to lieutenant Jeff Shell. Burke plans to retire in August.
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