Is Peacock Finally Ready To Strut Its Stuff On The Big Stage?
As the old saying goes… you never get a second chance to make a first impression.
Peacock and parent companies Comcast and NBCUniversal are about to spend billions of dollars trying to prove that adage wrong, at least for the hybrid streaming service, as it heads into the most important month in its short existence.
On tap in February is its central role in presenting two of the world’s biggest sporting events, and a newfound commitment to far higher spending on original programming. The question is, can Peacock use the opportunity to peel away subscribers from its many competitors and then keep them around?
First up is the latest installment of the Winter Olympics. The Beijing games start today (Feb. 2) with preliminary competitions in luge and curling, and the Opening Ceremonies set for Friday.
NBC will broadcast a nightly primetime show hosted by Mike Tirico, and NBCU’s cable outlets will carry much else. But hardcore fans will need to pony up for Peacock Premium for access to every contest in every sport. Two weekends after the Olympics end, Peacock also will stream all 230 hours of NBCU’s Paralympics programming.
In the middle of all that, Tirico will fly back to Los Angeles to preside over NBC coverage of the NFL’s Super Bowl, the biggest show on U.S. television. Peacock will stream the Feb. 13 game and surrounding programming, giving it a chance to experiment with different approaches to coverage, deep game data, more shoulder programming, and more advertiser options.
Peacock’s role in carrying programming for both huge events may be pivotal for NBCU’s overall success, given the flagging ratings on traditional TV for both the 2021 Super Bowl and the pandemic-delayed Tokyo Summer Games last summer.
The Tokyo Games pulled the worst ratings ever for an Olympics broadcast, not a good long-term sign for Comcast and NBCU, which have committed billions of dollars for the rights to televise the winter and summer games for another decade.
Last year’s Super Bowl also took a beating in ratings, the audience down 9.5% from the previous year and even more compared to average viewership of the previous decade’s games. Ratings were the lowest in five decades, dating back to Super Bowl III in 1969 (NBC broadcast that one too).
The game’s actual ratings remained high (38.2 and a 68 share), at least when compared to everything else on traditional TV. And NFL games remain the biggest thing on U.S. TV, comprising 75 of last year’s top 100 most-watched TV shows of any kind. That sustained primacy allowed NBC to charge a record $6.5 million for a 30-second spot for this year’s game, up $900,000 from the previous two years.
Comcast and NBCU clearly grasp the opportunity they have to push Peacock amid the Olympics-Super Bowl confluence, judging from the last month’s fusillade of news releases, announcements, presentations, and other public statements.
But the most important thing the company could have said came late last week, during Comcast’s earnings call.
There, Comcast leadership committed to spending $3 billion on Peacock original programming, moving some planned spending on its linear and legacy operations into streaming, but also spending more money.
That commitment is double last year’s level, with a rise to $5 billion a year coming “soon.” That will be a drag on Comcast revenues, at a number analysts are starting to process as they consider tweaking their ratings of the company and its medium-term revenue prospects.
“Comcast is now leaning more fully into Peacock, which acts as a drag to our [financial] estimates, though is perhaps the best way forward,” Wells Fargo analyst Steven Cahall wrote Friday.
Other analysts, such as Cowen’s Gregory Williams, questioned the timing of the Peacock investment, given the flattening of growth in subscriber adds for all the major players in the past couple of quarters.
“Given the apparent slowdown in streaming industry growth over the past few quarters, we are not sure that we would be picking now as the time to invest more aggressively in Peacock,” Williams wrote.
Adding high-profile projects is already starting to happen. Among last week’s many announcements was one for supernatural drama Dead Day, an adaptation of a popular comic-book series.
The show’s provenance will motivate some fans, and so too will involvement by the project’s producers: The Vampire Diaries’ Kevin Williamson and Julie Plec. Other projects one or the other had run previously include the many Scream movies, Dawson’s Creek, The Originals, and The Following.
In perhaps a sign of the urgency Peacock executives now feel, the service gave Dead Day a straight-to-series order. It’s the kind of high-profile move Peacock will need to repeat if it wants to take off with viewers who have many, many other options.
The service is also promoting the availability this month of Bel-Air — its Will Smith-produced dramatic take on Fresh Prince of Bel-Air — and simultaneous streaming and theatrical availability of the Owen Wilson-JLo romcom Marry Me.
But Peacock’s original programming has been uninspiring at best, and scarce to boot. Just look at the top 10 streaming series and feature-length projects on Whip Media’s latest weekly TV Time Watch Report. Netflix has six of the top 10 series, led by Ozark, whose latest and last season just debuted. HBO Max, Hulu, and Disney Plus projects round out the list.
The list of most-watched features is more balanced. Disney Plus has four movies on the list, led by animated family hit Encanto. Netflix has three more, and Amazon Prime has another animated family film. HBO Max topped the list with teen drama The Fallout.
Other third-party lists, such as Screen Engine/ASI’s figures for SVOD premiere movies, may stack up somewhat differently (Apple TV Plus’ The Tragedy of Macbeth clocks in at No. 10 there), but the bottom line is none of the lists include Peacock projects. There just hasn’t been much to preen about.
Spending $1.5 billion a year won’t build much market share when competitors such as Netflix, Disney, Apple, Amazon, and HBO Max are spending at least $6 billion annually each, and in Netflix’s case, roughly 11 times more. Those services are regularly delivering must-watch shows. With little distinctive to watch, it’s no surprise customers have been slow to flock to Peacock.
During last week’s earnings call, Comcast executives said the service has 24 million subscribers, though only three in eight of them are paying customers. For comparison, during 2020, as streaming took off amid the pandemic, Netflix added 28 million paying subscribers, more than Peacock’s total viewership after nearly two years of operation.
My TVREV colleague Alan Wolk suggests, rightly I think, that Peacock is structured for potential long-term success thanks to its hybrid approach, with three tiers that can be a powerful engine for cross-promotion and upselling.
There’s a free, ad-supported bottom tier that doesn’t include, for instance, all those Olympic sports, English Premier League soccer or other expensive high-end content, but provides a powerful pathway to get customers in the door, and show them what they get if they pay a bit more.
Accordingly, for $4.99 a month, subscribers get the Premium tier, with ad-supported versions of everything Peacock has. Chip in $9.99 a month, and your experience is largely ad-free.
But playing not to lose, which is what Comcast has been doing with Peacock, doesn’t mean you’re winning, as those NFL coaches in the Big Game might say.
Even with its modest programming budget, prime position on Comcast’s Xfinity devices, and the general growth of streaming, Peacock still lost $1.7 billion last year. This year, as those programming costs kick in, Peacock is projected to lose $2.5 billion more.
There are some reasons for optimism. A recent Kantar report said Peacock was No. 2 in signups last quarter among the big services, up 3 percentage points to 12 percent, though more than half the new subs came through the free tier.
Importantly, churn levels were low too, just 5.5% of survey respondents expecting to cancel Peacock in Q4. That’s less than half the ugly numbers of the previous quarter, according to Kantar.
But now comes the hard part. Peacock will have a prominent position in NBCU’s high-profile programming this month, a chance to attract millions of new customers, and cement a durable position here in the next era of the streaming wars.
But once the Games, and The Game, are done, Peacock must figure out how to keep those new subscribers around, and how it will keep building a service that can fly high.