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In September 2019, Steve Burke, then NBCUniversal chief executive, called Matt Strauss, with a question: Would he take the wheel of the Peacock project?

Strauss would need to unleash the service across the U.S. on a dauntingly short timeline — in just 10 months, pegged to the Tokyo Olympics (more on that later). Peacock would face massive competitors and come to the starting line with comparatively very low brand recognition. Comcast and NBCU wouldn’t be investing as much in the project as peers Disney or WarnerMedia planned to in their respective streaming vehicles.

Peacock also would involve a more complex and, to consumers, potentially confusing go-to-market strategy, with various free, ad-supported versions and premium no-advertising options. The job required coordinating the work of teams in the U.K., New York, Los Angeles, and Lisbon, Portugal, among other locations — Peacock today has a staff of about 1,000 — and collaborating with most of NBCU’s other business units.

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Zohar Lazar for Variety

And Strauss, who at the time was executive VP of Comcast’s Xfinity consumer services, based in Philadelphia, would need to relocate to New York City. Peacock had until then been overseen by Bonnie Hammer, a longtime NBCU creative exec, and Burke wanted a more product- and tech-oriented leader to shepherd the OTT initiative. (Hammer moved into a new role as chairman of NBCUniversal Content Studios.)

Strauss mulled over the proposition for a few days, then eagerly accepted. “To me it was like a no-brainer. It was exciting,” he says. Within a week, he had packed a bag, then spent the following several months living out of various hotel rooms in the Big Apple. “My wife still doesn’t know what happened. I said, ‘I have to go and get this product launched!’”

Next week (on July 15), Peacock is set to unfurl its plume for a national audience, after a three-month test run on Comcast systems.

Strauss, chairman of Peacock and NBCU Digital Enterprises, doesn’t have everything he wanted for the streaming service’s big debut. Most of the Peacock originals slate has been delayed by COVID-19. The service will come out with just nine originals, which include a slick series adaptation of “Brave New World” and U.K.-set workplace comedy “Intelligence,” starring David Schwimmer. The Summer Olympics were postponed until 2021, depriving the launch of some valuable promotional real estate. And with two weeks before go time, Peacock had deals for Apple, Google, Xbox and Vizio and LG TVs, but still had not clinched distribution pacts with Roku or Amazon Fire TV, the two biggest over-the-top TV device makers (which also have been holdouts on HBO Max).

But Strauss remains undeterred, convinced that Peacock’s greatest potential lies in the free-to-watch tier with a light advertising load that promises no more than 5 minutes of commercials per hour. NBCU’s theory is that “Free as a bird” will resonate with millions of Americans who are financially strapped or just too maxed out to pay for yet another streaming package.

Even before COVID-19 hit, “there were already signs of subscription fatigue,” he says. “And there was this belief in the industry that people didn’t want advertising or didn’t like advertising. That just isn’t true. Free, ad-supported content plays to our strength, and that has been where we focused.”

Adds Strauss of the advertising-based plan, “In an unstable economy, it’s taken a different meaning. It’s more relevant now than any other time.” He likens the rush into subscription-only business models to “a swarm of bees.”

In streaming video’s animal kingdom, Peacock is both fish and fowl.

While Hulu sells a cheaper VOD service with ads, the streamer killed off its free-to-watch service in 2016. (Hulu is now controlled by Disney, after Comcast agreed to sell its stake.) For now, Peacock uniquely blends current TV content; a back catalog of movies, sitcoms and dramas; news; late-night segments; and sports and other live programming rolled into one service, available either for free or for a $5-$10 monthly fee, the last without ads.

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Zohar Lazar for Variety

But analysts say Comcast and NBCU realistically didn’t have much choice about Peacock’s tack. Of the big media companies, it’s the last to push into direct-to-consumer streaming, and its content catalog doesn’t match the breadth of those of WarnerMedia or Disney.

Peacock’s prioritizing the ad-supported VOD side (or AVOD, in industry lingo) was all but inevitable, says Laura Martin, senior media analyst at Needham & Co. “This is the only strategy that NBCU can really have,” she says. “To launch as the 10th subscription service was not as good an idea as trying something different.”

Like every other media and entertainment conglomerate, NBCU needed a direct-to-consumer play in order to have access to first-party data and best monetize its intellectual property, says Martin. To feather Peacock’s nest, the company is also reclaiming content it had licensed: “The Office,” hugely popular on Netflix, will come to Peacock in January. NBCU can pull its content from Hulu starting next year on a nonexclusive basis, and by 2022 has the right to cancel most of its content-licensing agreements with the service.

Comcast was hesitant to move quickly into OTT because of the potential for conflict with its cable programming partners, says Tuna Amobi, senior equity analyst with CFRA Research. Only in the past few years has the effect of cord-cutting on cable TV pushed Comcast to fully embrace internet video — an effort, not incidentally, led by Strauss. “The landscape was changing so fast, their hand was forced. Effectively, they were in a position where they had to respond,” Amobi says.

The industry’s read on Peacock is that NBCU started with the same idea as everyone else — to create a subscription service to compete with Netflix. But once the SVOD market grew uncomfortably congested, legacy media companies began to turn their focus on free video services. Last year Viacom bought Pluto TV, and more recently Fox Corp. snapped up Tubi. Comcast has acquired free streamer Xumo, and NBCU’s Fandango is in the process of closing a deal for Walmart’s Vudu.

“In a global business worth billions of dollars, we always anticipated more entrants into free streaming and AVOD,” says Tubi chief revenue officer Mark Rotblat. Tubi’s long-tail approach to content and cost model make it different from Peacock, he says. But, Rotblat acknowledges, “in the ad business, there’s only so many dollars to go around, so in that sense they will be competition.”

NBCU execs insist AVOD was always in the cards. As far back as three years ago, NBCU had planned to have an ad component for what became Peacock, according to Linda Yaccarino, the media company’s chairman of advertising and partnerships. “Marketers need scale, and there’s no surrogate for free, premium content in generating scale,” she says. “AVOD was the right bet. There’s no question about where consumer behavior has gone.”

“I don’t think we’re anywhere near the saturation point with streaming. There’s a huge , insatiable appetite for the next three-to-five years. There’s still a lot o f runway ahead.”
Tuna Amobi, Analyst

Peacock is in several ways a defensive play, designed as a hedge against the market forces pressuring NBCU’s TV networks and Comcast’s pay TV biz. In 2019, Comcast shed 671,000 residential video subscribers (down 3.2%) over the previous year, while NBCU cable networks revenue dropped 2.2%, to $11.5 billion during the same period.

NBCU is using Peacock to reinforce the legacy pay TV business of parent Comcast and other operators. (Cox Communications is a launch partner for Peacock.) Peacock Premium with ads is included for no extra charge to Comcast’s and Cox’s customers; for others, it’s $4.99 per month. To get Peacock without any ads, it’s another $5 per month, but Strauss says that isn’t where the team is focused. He wants to strike additional deals with pay TV partners and platform providers modeled on the deals with Comcast and Cox. Fast forward two years, he says, and the goal is for “the majority of market to be able to get Peacock free.”

In other words, as Strauss outlines it, Peacock looks sort of like a basic cable channel — except, he says, NBCU is not asking for carriage fees from any affiliates. He’s circumspect about whether Peacock is open to revenue-sharing agreements, saying there are “different forms of value exchange.”

As it turns out, launching during a global health emergency may be a stroke of luck for Peacock and its free-to-watch story. During the pandemic, 47% of U.S. consumers said they used at least one free, ad-supported streaming video service, according to a Deloitte survey. The majority said they want access to cheaper, ad-supported streaming-video options, both before the COVID-19 outbreak (62%) and since (65%). And while Americans have signed up for more SVOD services — an average of four now, versus three pre-pandemic — they’re canceling those at a higher rate now, the study found.

“The industry can’t just keep adding new paid subscriptions,” says Kevin Westcott, Deloitte’s U.S. telecom, media and entertainment leader, pointing out that there are more than 300 individual subscription-video platforms in the U.S. alone.

The allure of free streaming will be a major growth opportunity in 2020, Westcott predicts: “This will be the year of ad-supported VOD.”

Along with the COVID-19 disruption, Strauss has had to juggle management changes as Peacock races toward its unveiling. He’s had three bosses in the past six months: Burke announced in December he was retiring, replaced in the CEO post by Jeff Shell, formerly head of NBCUniversal Film and Entertainment. Then in May, Shell put TV programming boss Mark Lazarus in charge of a new group, NBCUniversal Television and Streaming, overseeing Peacock along with the networks, stations and NBC Sports.

Shell’s vision with the reorg is “how are we going to organize the company for the next decade,” says Lazarus. “We both thought the best structure for the company was to put all of the entertainment businesses into one portfolio.” The strategy, according to Lazarus, is that Peacock fits into NBCU’s overall approach to entertainment to “leverage our scale in the creative community to acquire, curate and produce content for Peacock.”

Lazarus concedes that the Olympics was going to be “a very nice launching pad” for Peacock. But he says the silver lining is that NBCU was able to reallocate to Peacock promotional resources that would have gone to the Summer Games. And NBC will have the Olympics next summer, followed by the 2022 Super Bowl and the Beijing Winter Olympics, also in 2022.

Strauss is well suited to adapting to shifting conditions, according to a former colleague, who says he’s an exec who embodies “the Comcast way”: He’s a strategic thinker who doesn’t panic, can maintain enthusiasm without being Pollyannaish and engenders team loyalty.

Strauss says Lazarus is helping Peacock get buy-in from other parts of NBCU that may be reluctant to move fast. “Challenging the status quo, it takes time,” Strauss says. “Having Mark in this position accelerates that.”

Analysts agree that while Peacock may be coming out of its shell later than other streaming services, it’s not too late to make a mark. “Arguably, among ad-supported platforms, if there’s a leader, they’re definitely the one to watch,” CFRA’s Amobi says. “I don’t think we’re anywhere near the saturation point with streaming. There’s a huge, insatiable appetite for the next three-to-five years. There’s still a lot of runway ahead.”

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Zohar Lazar for Variety

Lazarus disputes that Peacock is meaningfully “late” to the game: “This is early days. I don’t think five years from now we’ll be talking about who was first, who was second.”

During the pandemic, Peacock has been able to “accelerate our deal flow” for content licensing, Strauss says, citing pacts with A+E Networks, Warner Bros., Sony and Paramount. The Peacock Premium tier will have close to 20,000 hours of content at launch (versus the 15,000 hours NBCU projected earlier this year), and Peacock Free will have more than half the titles in the upper tier.

The streamer will feature current-season programming from NBC and Telemundo; access to hundreds of movies, like “Jurassic Park,” “Do the Right Thing” and “Shrek”; and TV comedies such as “Parks and Recreation,” “30 Rock,” “Saturday Night Live,” “King of Queens,” “Everybody Loves Raymond” and “Two and a Half Men.” Peacock also is home to dramas including “Law & Order: SVU,” “Downton Abbey,” “Yellowstone,” “Friday Night Lights” and “House,” as well as kids programming including “Curious George” and DreamWorks Animation’s “Where’s Waldo?”

Peacock will include daily programming highlights from NBC News outlets, NBC Sports, E! News and Access Hollywood, as well as late-night fare from Jimmy Fallon and Seth Meyers. It will have an NFL Wild Card game in January 2021 and sports like Premier League soccer and Ryder Cup coverage. News and sports are “an important part of our content strategy,” says Frances Manfredi, president of content acquisition and strategy for Peacock and NBCUniversal Digital Enterprises.

As Manfredi concedes, Peacock isn’t going to get content from some quarters. “It would be stupid to deny that the vertical integration isn’t happening in the market,” she says. On the other hand, the Peacock acquisitions team has had “a lot of discussions with studios that felt their content potentially gets lost on really large platforms. They felt we would give them more attention in terms of promotion,” according to Manfredi. “Nobody has said, ‘Nah, we don’t want to be on Peacock.’”

Peacock’s originals slate is led by Bill McGoldrick, president of original content for NBCU Entertainment Networks and Direct-to-Consumer. The originals cut across genres and range from the forthcoming “Battlestar Galactica” reboot from exec producer Sam Esmail (“Mr. Robot”) to a revival of “Saved by the Bell.”

What makes a Peacock show versus, say, one for Bravo or USA? “The word we use is ‘premium,’” McGoldrick says. “We need a certain amount of those shows that create bigger swings.” The fact that Peacock isn’t going to churn out hundreds of originals (which it wouldn’t be doing even without COVID) is something McGoldrick spins into a plus in talks with producers. NBCU won a bidding war for “Dr. Death,” based on the Wondery podcast, by highlighting the promotional opportunities Peacock was prepared to provide for the show, which stars Jamie Dornan, Christian Slater and Alec Baldwin. “We can say, ‘You are not going to go into a big conveyor belt that will forget you unless an algorithm brings it up.’”

Comcast has projected it will invest $2 billion into Peacock over 2020 and 2021. The company expects the streamer to generate $2.5 billion in revenue by 2024, with 30 million-35 million users, and to break even that year. But does NBCU need to pump more cash into Peacock to stay in the race?

“Spending more money doesn’t mean you’re going to be more successful,” Strauss says. Once Peacock achieves “meaningful share” in the next few years, “that opens up opportunity to make decisions about more investment and strategic decisions.”

As for the low consumer awareness for Peacock: It stands just a hair higher (26.8%) than Quibi (24.8%), per a recent YouGov survey provided exclusively to Variety Intelligence Platform. Strauss believes the branding exercise will be a function of time for Peacock (which, obviously, nods to NBC’s iconic logo).

“We made this strategic decision to not call ourselves ‘NBC Plus,” Strauss says. “We certainly see the value of the NBC catalog and the history of the content. But at the same time, we called ourselves Peacock, and that gives us permission to create a service that is not exclusive to NBC.”

Using data from the initial Comcast test, reaching 15 million Xfinity X1 and Flex customers, Strauss and the Peacock team have made some adjustments ahead of the broader midsummer launch. Strauss had T-shirts made for the crew with the word “Pivot”— a well-known Shell directive — emblazoned across the back.

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Zohar Lazar for Variety

Among the learnings: People were looking for an escape from the news, with viewing of classic movies like “E.T. the Extra-Terrestrial” and Hitchcock films performing well, along with nostalgic comedies like “30 Rock,” “Frazier” and “Everybody Loves Raymond.” Peacock adjusted to account for the viewing behavior.

Also, Peacock users gravitated to the curated channels on the service, around brands like NBC News Now, shows like “SNL” and genres like true crime. For the U.S. launch, Peacock will more than double those channels, to more than 40, with a longer-term target of having around 75. (That will include a channel around “Keeping Up With the Kardashians.”)

“Sometimes when you turn on the TV, you just want to watch TV,” Strauss says. “There’s this notion that ‘Nobody watches TV’ — but the data suggests something different.”

Working during COVID-19 has, of course, been as much of a challenge for Peacock as it has for any other enterprise. Strauss had been holed up in his Cherry Hill, N.J., home before decamping in early June to the family’s summer house on the Jersey Shore. “I had to get a desk, buy a printer and move my kids’ Xbox and their computers so they could play ‘Fortnite,’” he says.

Strauss holds two all-hands meetings each week (on Mondays and Thursdays) for Peacock. So far, there have been more than 30 such confabs. Before, the team was meeting as a group just once a month. The Peacockers include the British team developing the service’s tech infrastructure, composed of the same folks who built the Now TV streaming service for Sky (the U.K.-based satellite operator Comcast bought in 2018).

“The team hasn’t lost any momentum,” Strauss claims. “We’ve been able to hit all our deadlines. I’m really proud of that fact. We are probably working better than we were before.”

For the Peacock team, Strauss says, he’s tried to establish a culture of more risk-taking and agility — a philosophy that goes against the grain of the make-sure-not-to-break-anything world of traditional cable. “As you are navigating change, you have to be flexible,” he says. “We have a young culture, and I’m excited about our future.”

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