Comcast’s Peacock Is No Disney+. Here’s Why That’s OK

Comcast's Peacock Is No Disney+. Here's
Cheyne Gateley/VIP

There wasn’t much to be thrilled about in Comcast’s second-quarter earnings report, but the one bright spot in an otherwise bleak quarter came down to the company’s new streaming service, Peacock.

In just about two weeks since its nationwide launch, NBCUniversal’s Peacock surpassed 10 million sign-ups to date. 

Comcast is leaning into streaming, according to CEO Brian Roberts. “Comcast is truly in an enviable position … [Peacock] exceeded our high expectations,” Roberts said on the earnings conference call with analysts Thursday morning. 

Pretty good, right? Well, maybe not compared with the jaw-dropping launch of rival Disney+.

At the time of its launch in November, Disney+ reported hitting a whopping 10 million sign-ups across the U.S., Canada and the Netherlands within a day of its rollout. As of April, Disney announced that it had more than 50 million subscribers globally.

And while Peacock doesn’t quite match the massive reach of Disney+ yet, it might be holding its own against another big rival, HBO Max. HBO Max had 4.1 million activations in the U.S. as of June 30 since its launch in late May, according to parent company AT&T. The company’s description of activations referred to roughly 3 million sign-ups and 1 million “conversions,” or being able to access HBO Max as part of regular TV HBO subscription.

So then why is Peacock’s start encouraging even as it appears much slower than Disney+? There are a few reasons why it is unfair to directly compare the two streaming platforms. 

Disney already had a beefed-up content library with beloved brands like Pixar, Star Wars and the Avengers, which could explain why it was off to a blowout start. And original content such as “Star Wars: The Mandalorian” was also ready to go out of the gate.

On the other hand, Peacock has yet to bring over a slew of its most popular content including “The Office” and “Fast & Furious.” Additional originals and live sports will also be available on Peacock helping fully realize its potential. While it is taking some time, Peacock could soon be on a level playing field with Disney+ once its library is fully stocked up.

One big upcoming tailwind content-wise for Peacock will come when the rescheduled 2020 Tokyo Summer Olympics and upcoming 2022 Beijing Winter Olympics take place. 

On the call, management mentioned that it is planning to work on a strategy to make sure Peacock is able to effectively capitalize on the back-to-back scheduled Olympics extravaganza. “[The Olympics are] a bit of a silver lining for Peacock,” NBCUniversal CEO Jeff Shell said. 

In addition, Disney+ and Peacock have very different business models. Disney+ relies on recurring revenue from monthly subscriber fees, so the overall number of subscribers is critical for growth.

Peacock will likely rely more heavily on ad dollars raked in through its free, ad-supported model. So while overall subscriber numbers matter, usage needs to be supported by ad sales in order to truly measure success.

Some have argued that Peacock could never get big enough to offset the struggling parts of Comcast’s business. But the new service is the big growth story for NBCUniversal and parent company Comcast, especially as cord-cutting continues to accelerate at a rapid clip. 

In the most recent quarter, Comcast lost 478,000 video subscribers for its worst quarterly loss ever and more than double last year’s 224,000 loss. 

All that said, one thing to keep in mind is the fact that there is no clarification on how sticky the recent 10 million Peacock sign-ups actually will be and how many intend to pay for the service going forward. As of April 15, Peacock was free for Comcast Xfinity and Flex customers. 

It is worth noting that Disney+ has a similar promotion deal with Verizon; Verizon Unlimited and 5G home internet customers are able to access Disney+ free of charge for 12 months. 

All-in-all, analysts were largely expecting a disappointing quarter for Comcast as the COVID-19 pandemic put significant pressure on most of the company’s cash generating businesses such as NBCUniversal’s theme parks and film segments. 

Nevertheless, despite all of the recent headwinds, Comcast posted free cash flow of $6 billion during the second quarter, which was more than double what Wall Street was projecting.

Comcast stock ended Thursday’s session just over a dollar lower than where it started the year. Since the March lows, shares of Comcast surged nearly 28% but still underperformed the broader market’s 45% gain during the same time period.