Universal Hit Or Olympic Miss? Peacock’s $2 Bet On Subscriber Loyalty

This month, Peacock is instituting a $2 price increase ahead of the Summer Olympics in Paris. Using major exclusive events to justify increased prices has been a common strategy for streaming services in recent years (looking at you, Prime Video and Thursday Night Football). The hope is that these acquisition driving events accumulate a mass of subscribers that don’t immediately churn out and instead begin to generate reliably recurring monthly revenue. 

In order to accomplish this, a given platform must have a library that can generate appropriate levels of audience demand to justify the initial price hike and keep subscribers on the hook for a sustained amount of time. That is how streaming services maximize the value of these moves.

Parrot Analytics’ Pricing Framework provides a good sense of streaming library value within the context of its price relative to rivals in the marketplace. Changes in pricing structure yield different value propositions to consumers, which can be tracked and quantified. 

Currently, Peacock Premium Plus and Paramount+ with Showtime cost the same ($11.99/month). Disney+ boasts roughly the same level of demand for its library as the upper tier of Paramount, but costs $2 more, creating a value imbalance for consumers. Once Peacock Premium Price lifts its prices by $2, it will cost as much as Disney+ but garner less overall catalog demand. The duration of the Summer Olympics will help smooth over this reality, as will the lead in to fall sports and broadcast programming. But longer-term, it’s difficult to rationalize this higher price without an influx of new notable programming. 

Peacock has enjoyed consistent growth in recent years (though when you’re starting from a smaller subscriber base, there’s often nowhere to go but up). Its bifurcated Pay One Universal film deals have proven effective at driving interest to the platform and raking in licensing revenue. The platform's emphasis on shoppable TV is a compelling focus area. But as of Q1 2024, it still ranked last month the major streamers in US audience demand share for originals and relies on linear programming to generate nearly 75% of its audience demand. 

It remains to be seen if the new heightened cost will be accepted or rejected by consumers overall.