The new streaming video app service (no download availability mentioned…) from Comcast/NBCU named Peacock, was announced in New York last week, taking full advantage of the value of showbiz glitz and glamour by hosting the event at SNL (Saturday Night Live) studios at 30 Rockefeller, with appearances by Jimmy Fallon, Tina Fey and Seth Meyers, as well as NBC News and Sports presenters.
Pitched on the premise of being “a broadcast channel for the 21st century” offering a combination of on demand and pulling content from dozens of regular Peacock TV channels eg. A SNL live channel, news sports, reality TV, comedy, drama, kids.
Here’s a big statement:
“I think our company is better positioned as the world moves to streaming than any other company in the world,” Steve Burke, Chairman of Comcast’s NBCUniversal unit said.
Proposing that Comcast’s broadband business and its Flex and Peacock streaming businesses, will be big money makers is a fair comment today, but how optimistic is it given the dynamic nature of the business, the established heavy weight competitors and over-fed consumer audience? Is that a myopic or insular view? Is it premised on an insular view of the US market while the whole world of viewers sits poised to gulp down content from anywhere, as long as it fits?
In my opinion, the greatest strength in the Comcast NBCU offering is in the diversity rather then the depth of their content catalogue. Ageing content catalogues are losing their value so much so that many streamers are only willing to pay for them on a as used basis, but emerging international markets represent fresh eyes for some of this content. Their strengths in news, weather, reality and Latino content are also attractive to a global audience.
Comcast NBCU’s preparedness to keep pace with innovation streaming, advertising and UX based technology was not an issue addressed in the Peacock launch but it’s extraordinarily relevant to the Mr Burke’s bold comment. Established and new entrants to the streaming market are tech driven and tech savvy, with business models that focus on UX, new advertising mechanisms, new content and satisfying the divergent demands of a global audience.
The Plan: Their intention is to make Peacock their lead TV service with consumers from this point, ultimately consolidating everything from its broadcast channels to this one platform, as they delicately balance licensing obligations to other SVOD providers and the Peacock line up. Hulu is their main competitor and at some point they might reclaim some of their licensed content from them. Seems to me more like transitioning the existing NBCU broadcast channel, to online for the maximum bearable price.
The goal is to reach what Comcast/NBCU must consider to be scale, of 30-35 million active users in the US by 2024 on a content catalogue, at least at launch, that is largely based on re-runs and reboots of formerly successful TV shows eg. Popular shows such as 30 Rock, The Office, SNL, plus some originals.
Scale was a word used often in the presentation, but I guess that’s a relative term. As we enter 2020, Netflix already has over 60 million subscribers in the US, Amazon Prime has over 40 million streaming content, Hulu has 28 million US subscribers and Roku has just over 32 million. Hard to imagine that having 30-35 million subscribers in four years time will make Peacock any more competitive.
The Price Point: The ad supported service will be available to everyone on all streaming devices be it Smart TV, mobile or streaming media players for $4.99 with ads, or $9.99 no ads. They boast 7,500 hours of programming available in ad supported and twice that in the premium tier.
Everyone on the ad supported tier ($5 p/m) will see about five minutes per hour of ads vs Hulu ($6 p/m) on 7-8 minutes of ads. This gives Hulu four minutes more per hour additional ad inventory and $1 per subscription more subscription revenue. I project future revenue results that will be comparatively lack lustre to analysts.
The premium service will be available at no additional cost for Comcast’s Xfinity X1, Flex and Cox customers on April 15, before launching nationally on July 15. Sport is seen as a key audience driver and the launch is timed to take advantage of the Olympics broadcast schedule. The free offer to existing customers should take the free version to about 24 million people. Free was another word used very often.
Whatever the streamer, the price wars in a nutshell are: no ads for $7-10 p/m, with ads $3-5 per month. The more interesting trend here is that for about $35 per month, US consumers can have access to all the streaming content they want – without ads! For around US$35 p/month they can have Netflix, Disney+/Hulu (including live sports and news), Roku AND Peacock. Who needs ads and who needs to spin at that price?
The Investment: Was it a bold market entry? Peacock plans on spending US$2 billion over the next two years to establish the service – I think that’s bold! It hopes to reach break even that same year with revenues of $2.5 billion.
The economics of this is interesting because if you’re not launching a subscription service for revenue, why would you launch it? In 2018 cable video and broadband segment was about $40 billion, so they plan on investing US$2.5 billion over the next 4-5 years to build the business up for about a six percent increment on 2018 revenues…That’s a pretty thin wedge of market share in the face of projected industry growth statistics.
While the world consumer transitions their viewing behaviour to streaming sources and existing content rights on popular content are rescinded, the streamers monetisation model demands subscription or pay per view. And the consumer will pay – to a point. But the biggest thorn in the consumers side for streaming will not be whether there is enough quality content to choose from or price resistance. The thorn will be UX in terms of easy, convenient access to it ie. navigation to it or more importantly being found by it.
For Advertisers: If you haven’t noticed, advertising is being reinvented to keep pace with changing consumer behaviour, cultural values and the advantages of technology. It’s adopting more native, organic, authentic executions – start thinking ‘the tone’ of Ricky Gervais in the bath for Optus for a start, or initiatives that marry with consumer needs eg. Cheddar and the bank providing free financial advice.
Though Peacock announced a variety of ad products for the ad-supported version of the service, the propensity to ‘interrupt entertainment’ to communicate, rather than own it and communicate through it was evident. The commercial ‘interloper’ is still kind of quarantined from the content rather than integrated to it with the e-commerce experience called “shoppable TV,” 60-second “prime pods,” interactive engagement ads, ‘solo ad’ sponsorships, editorially selected curated ads, contextually relevant explore ads, topical trending ads, voice-based on-command ads and the pause and binge ads, inspired by Hulu.
Ultimately advertisers will have to create their own content and distribute it either directly to their connected customers on their own channels (established on the basis of connection and relationship) or via an existing distribution channel, whether that channel be Roku, Disney, Peacock, Netflix or any other.
Advertiser content will have to be relevant and valued, it will have to find the audience, it will have to entertain, and/or inform and value add ie. be the conduit to giving the viewer something tangible.
In the long run I expect we’ll go full circle and content will be free to the consumer, as it always has been in FTA broadcast, but it will cost the advertiser to access the eyeballs the distributor/streamer provides access to. Advertisers will be charged to stream their custom content (series, docos, movies) and ads won’t be the traditional 15 or 30 second time slots, pre/post or any other roll.
The Content: I’m curious – no I’m more than curious to understand the real value of catalogues of ageing content that have already been widely available through the usual waterfall liquidation model ie. in cinemas, in flight, in hotels, FTA and pay TV and at retail on DVD. Especially in an era where so much new content is being produced and the emerging generations gulp down in binge sessions.
In a content strategy that supposes everything old is new again, Peacock’s content line up shapes up as follows:
Reboots of “Battlestar Galactica,” “Punky Brewster” and “Saved by the Bell,” plus new series like “Dr. Death,” based on the true-crime podcast; “Brave New World,” based on the dystopian Aldous Huxley novel; an SNL docu-series “Who Wrote That”; “One of Us Is Lying,” based on the NYT best-seller.
More recent additions to the originals lineup include the Fey-produced comedy “Girls5Eva,” as well as in-development shows like “Expecting” from Mindy Kaling, “Division One” from Amy Poehler, “Clean Slate” from Norman Lear and “MacGruber,” from Will Forte.
Peacock will also be the new home for “The Office,” the most watched series on Netflix.
Other NBC shows will be available on Peacock, too, including “30 Rock,” “Bates Motel,” “Battlestar Galactica,” “Brooklyn Nine-Nine,” “Cheers,” “Chrisley Knows Best,” “Covert Affairs,” “Downton Abbey,” “Everyone Loves Raymond,” “Frasier,” “Friday Night Lights,” “House,” “Keeping Up with the Kardashians,” “King of Queens,” “Married…With Children,” “Monk,” “Parenthood,” “Psych,” “Royal Pains,” “Saturday Night Live,” “Superstore,” “The Real Housewives,” “Top Chef” and “Will & Grace.”
Popular films to stream on Peacock include “American Pie,” “Bridesmaids,” “Knocked Up,” “Meet the Parents,” “Meet the Fockers,” “A Beautiful Mind,” “Back to the Future,” “Brokeback Mountain,” “Casino,” “Dallas Buyers Club,” “Do the Right Thing,” “Erin Brockovich,” “E.T. The Extra Terrestrial,” “Field of Dreams,” “Jaws,” “Mamma Mia!,” “Shrek” and “The Breakfast Club.” Peacock will also feature films from these franchises: “Bourne,” “Despicable Me” and “Fast & Furious.”
The Hulu Factor: In hindsight had Comcast taken the balance of Hulu for around $12-14 billion (comparatively cheap when you consider they paid $40 billion for Sky) back when the Disney/Fox/Comcast corporate deals were being done, they may have had an easier road to hoe.
Purchasing Hulu back then would have given them the established platform, another established customer base, more quality content and their ad model, all of which might have put them in the streaming starting blocks without the burden of an independent start up back-pack…
One wonders whether the powers that be didn’t recognise the potential in Hulu and considered the reach and might of NBCU to be adequate to the task of tackling Hulu back then – back before consolidation by Disney unleashed it’s potential.
The Up-Shot: Despite the catalogue of existing content, stable of talent and collective databases of Comcast and NBCU, it looks to me like Peacock is a very late starter to the streaming party and is in a difficult catch up position. But at least they have made the move to transition into the streaming environment. Maybe that’s the point.
If you would like to know more about what’s happening in the streaming world, contact Wanted Consulting – Reward Offered.