Why Comcast’s Peacock Can Be A Big Threat In The Streaming Wars
The streaming industry has grown incredibly competitive only in the last couple of years with the introduction of platforms such as. Walt Disneywithout Disney +, Warner Bros. Discoveryis HBO Max, and appleits Apple TV + in addition to the industry giant Netflix (NFLX -1.28%). As a result, streaming wars have become a hot topic of conversation among analysts.
Another company that joins the fight is Comcast (CMCSA -0.18%), which has made significant progress with the Peacock streaming service. Here’s why investors make the mistake of ignoring this streamer and how it can significantly threaten competition.
Peacock was launched in July 2020 from Comcast’s TV and streaming division, NBCUniversal. The platform offers a library of NBCUniversal and third-party content, including TV series, movies, news and sports. Consumers can choose from three subscription options: a completely free, ad-supported level for access to part of the library; a second ad-supported level of $ 4.99 per month with access to the entire library; and an ad-free experience for $ 9.99 per month.
The streaming service has so far proved incredibly successful for Comcast. In June, the company boasted that Peacock had doubled its turnover over the past year from $ 500 million to $ 1 billion, resulting in the “highest earning in advance” [revenue] since Comcast’s acquisition “of NBCUniversal over 10 years ago.
Peacock has offered ad-supported content from the start, which seems to have paid off. A recent study showed that Peacock has a higher percentage of ad-supported subscribers than any other platform, with 73% of respondents choosing ads on the NBC platform and 20% becoming ad-free. In contrast, HBO Max has the lowest number of ad-supported users at 28%, and Paramount + is the second highest at 64%.
In addition, Peacock has consistently increased its share of the electricity market each year. The power service grew from a share of 2% of subscriptions in the first quarter of 2021 to 7% in the first quarter of 2022, an impressive increase of five percentage points. In the same time frame, Netflix went from 34% to 27%. Peacock also saw the largest growth in subscription share than any other power service from the fourth quarter of 2021 to Q1 2022, with an increase of 2%.
Comcast’s acquisition of NBCUniversal in 2011 gave the company access to a library of content in a league similar to Disney’s. Peacock has the potential to offer top-rated NBC sitcoms such as The office, Parks and recreationand 30 Rockin addition to titles from Universal’s library of movies including fan-favorite franchises such as Jurassic Park, Fast furiousand Slaves.
The universal sequel Minions: The Rise of Gru, released on July 1, broke the ticket sales record for the largest opening over a July 4 holiday weekend, bringing in $ 125 million domestically. When it comes to streaming, Peacock will be able to use the film to attract viewers.
NBC sitcoms have a history of capturing large viewing hours for streaming platforms. In 2020, The office collected 57 billion streamed minutes from US Netflix users and was the most streamed series of the year. Although The office had been a staple of the Netflix library for years, NBCUniversal paid $ 500 million in 2019 to get the sitcom from the streaming giant and offer it on Peacock. In an attempt to retain at least shared streaming rights to the workplace sitcom, Netflix offered NBC $ 90 million a year to stream the show, but was eventually denied.
While Peacock competes in a market that is already crowded with power options, it has an excellent method of attracting new users. Its free, ad-supported level with partial access to the platform’s library allows the company to engage viewers without obligation. This strategy creates the chance that users will enjoy the service enough to have access to the entire library and switch to a paid subscription. If not, Comcast can still generate advertising revenue from the lowest users.
What’s next for Peacock?
Comcast groups Peacock in its media division, responsible for 19% of the business in 2021. It is the second largest part of Comcast’s business after cable communication with 53%. From the first quarter of 2021 to the first quarter of 2022, however, the division including Peacock achieved 36.3% more revenue while cable communication revenues increased by 4.6%. Although the company does not break down exactly how much of the media sector Peacock claims, this time frame coincided with the streamer doubling revenue.
As Peacock continues to increase its market share, avid investors will want to keep an eye on Comcast’s media division on a quarterly basis. If revenues continue to grow at the current rate, Peacock will become increasingly integrated into Comcast’s business.