Comcast expects to pump $2 billion into NBCUniversal’s Peacock streaming service in aggregate over 2020 and 2021, while the company is projecting it will not be profitable for the first five years, according to CFO Mike Cavanagh.
Cavanagh, who provided the details Monday at UBS’s Global TMT Conference in New York City, tried to put the Peacock investment in content, technology and marketing into context for the cable and media giant — saying the spending earmarked for the streaming initiative will peak at about 1% of Comcast annual revenue.
The partially ad-supported Peacock is slated to launch in April 2020, with Comcast pay-TV subscribers to have access for no additional charge. The service will also be available for a fee to non-Comcast television subscribers, but Cavanagh didn’t disclose any info on pricing. There will be “different pricing schemes,” he said, but the advertising model “will make the price to consumers sensible.”
Comcast is expecting its biggest win with Peacock to be its advertising model relative to the other combatants in the streaming wars, Cavanagh said.
“We think we’ve got a pretty special opportunity, when you think about the relatively underserved segment of premium content [that is] ad-supported,” he said. “Consumer demand is there, with all the pay-for SVOD services that are proliferating.” Comcast research has found that 80% of consumers are interested in watching a premium VOD service that has a “reasonable amount of ads,” he added.
Comcast has scheduled an investor meeting for Jan. 16, 2020, where it promises to outline additional plans for Peacock.
Comcast’s ad-supported VOD plan for Peacock will lead to a “lower aggregate investment” required to achieve break-even compared with subscription VOD models, according to Cavanagh. He said Peacock is expected to hit the break-even point in Year 5. Cavanagh compared the investment in Peacock to Comcast’s upfront costs for the Xfinity Mobile virtual wireless service, in which the operator invested close to 1% of total revenue and is expected to be at break-even in 2021.
Cavanagh said Comcast’s No. 1 priority for 2020 will be to continue driving growth in it broadband businesses, which he called the “center-of-the-plate” services. The operator’s broadband biz is on track to generate $26 billion in revenue this year and will add as much as $2 billion in incremental revenue in 2020. The second biggest investment area for the company next year is in content aggregation, including for Xfinity TV and the Xfinity Flex video offering for broadband-only customers.
“We make money in video… and it’s important to our customers,” Cavanagh said. “But given the rise of streaming and interest in streaming, there are increasingly homes where you can’t provide the full experience and expect to make money doing so… We’re not going to chase unprofitable relationships but rather figure out ways to give consumers choices.”
In October, NBCU reshuffled the leadership of Peacock: It named Matt Strauss, a longtime Comcast exec, chairman of Peacock, and moved veteran TV exec Bonnie Hammer, who had been overseeing the company’s direct-to-consumer efforts, to chairman of NBCUniversal Content Studios (combining Universal Television and Universal Content Prods.).
Peacock will be the streaming home of “The Office,” which is leaving Netflix at the end of 2020, and “Parks and Recreation,” also exclusively on the service. To stock Peacock, NBCU also has licensed long-running favorites from other studios, including a deal with Sony Pictures Television for the rights to “Married With Children” and “The King of Queens.”
Other shows set to stream on Peacock include “30 Rock,” “Brooklyn Nine-Nine,” “Cheers,” “Everybody Loves Raymond,” “Frasier,” “Saturday Night Live” and “Will & Grace.” In addition, Universal Pictures, Focus Features and DreamWorks Animation will create original movies for Peacock. Peacock also will draw on NBCU’s news, sports, cable unscripted and Spanish-language divisions for additional programming.
Original dramas NBCU has announced for Peacock include a “Battlestar Galactica” reboot from Sam Esmail; “Dr. Death,” based on the podcast from Wondery of the same name, starring Alec Baldwin, Jamie Dornan and Christian Slater; “Brave New World” with Demi Moore; and “Armas de Mujer” from the team behind Telemundo’s “La Reina del Sur.” The service’s original comedies are set to include a revival of “Saved by the Bell” with original series cast members Mario Lopez and Elizabeth Berkle, along with shows from partners including Jimmy Fallon, Seth Meyers, Lorne Michaels, Mike Schur, Ed Helms, Jada Pinkett Smith, Rashida Jones and Tracey Wigfield.