What Everyone Keeps Getting Wrong About Peacock

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Peacock is Comcast’s NBCUniversal-powered entry into the SVOD market.

This is a truth held by many in the media business, analysts and execs alike. Yet it is not the core driver of what led Comcast to invest in Peacock, nor what it is today.

With Comcast making a serious push into connected TV on multiple fronts — the Flex joint venture with Charter, launching its own brand of smart TVs, the purchase of Xumo and the launch of Peacock — it was not surprising to see Comcast CEO Dave Watson speak recently about plans to license the company’s Flex system to other MVPD providers.

This is where Peacock comes in. Peacock is heavily integrated into both the Flex and the Xfinity set-top box, and as this commentary explores, there’s more value to it from a CTV perspective than as a pure SVOD.

How a consumer perceives Peacock shifts based upon an individual’s circumstances and location. If you subscribe to Comcast, Cox or Charter cable TV or broadband service, you have free access to the ad-supported SVOD tier, making it AVOD. For others outside the geographic service areas for these MVPDs, access to the premium tier is SVOD-only.

While the number of subscribers to video service continues to trend downward, total subscribers to at least one of broadband and cable continues to grow. Both Charter and Comcast have seen total residential customers increase at a similar rate between Q1 2020 and Q1 2022 — 8.3% for Charter (+2.29 million) and 8.2% for Comcast (+2.43 million). That’s a total increase of 4.72 million, yielding 61.9 million customers with free access to Peacock’s premium tier, with Cox yielding an additional 5 million.

In addition to the premium-service tiers, Peacock also includes a substantial free AVOD and FAST service for anyone to access. As Comcast wisely opted to include all service tiers under one roof — unlike Paramount, which would like users of its free (Pluto), pay (Paramount+) and premium pay (Showtime) services to pinball around from one to another — Peacock is able to monetize AVOD, FAST and ad-supported SVOD user viewing time in the same app.

A downside of housing all offerings under one roof has been confusing reporting in the quarterly earnings calls. For several quarters, Comcast persisted with only giving out the number of monthly average accounts, which led to confusion among analysts over what a "subscriber" actually was. Thankfully, this has been simplified since Q4 2021, with the current stats showing 13 million paid subscribers (up 44% from 9 million in Q4) and 15 million monthly average users (down -3.2% from 15.5 million).

This confusion also masked for many the true goal of Peacock. The recent deals with Charter for first subscriber access to Peacock and, more recently, partnering on the Comcast Flex CTV device, show that Comcast’s goal is to integrate Peacock into as many pay TV subscriptions as possible. Let’s not forget that during the NBCU-YouTube TV fall 2021 carriage standoff, a key bone of contention was NBCU’s early insistence that Peacock be included in the lineup (though it didn’t come to pass).

Integration into set-top boxes and CTV interfaces via Flex and Comcast’s XClass line of smart TVs is a key priority for Comcast, with Peacock becoming more of a CTV play than an SVOD one. Peacock content, along with that from Xumo, Comcast's prior FAST acquisition, appears in the EPG for Comcast video subscribers, as well as being incorporated into the home screen for Flex, boosting viewership of titles and, perhaps most important, exposing them to ads that Comcast monetizes.

A case study of Peacock content integration is Comcast’s investment in the WWE, being the exclusive U.S. home for the WWE Network service and offering all Comcast, Cox and Charter subscribers free access to WWE’s monthly big events, including Wrestlemania.

Comcast has access to over 17 million set-top boxes as well as the viewing data from these, which likely influenced the decision to partner with WWE. So far, the move is paying off nicely for both companies. WWE went from having to run a tech division (in the U.S. at least; overseas, WWE Network still runs) to focus on the core business. Peacock saw a huge uptick in viewers of WrestleMania versus when it was on the WWE Network due to the successful integration of Peacock content across Comcast’s footprint.

Peacock not being considered primarily as an SVOD makes sense given that as a pure SVOD service, the streamer is considerably below industry rivals Netflix, Hulu, Disney+, HBO Max and Paramount+ for marquee originals and buzz.

But consider that Comcast is able to use the subscription revenue generated by part of Peacock's user base to fund new content for all of Peacock. If it can create content that those exposed to Peacock want to watch and further monetize this via ads, the service doesn't necessarily have to go toe-to-toe with industry heavyweights to be a success.

The integration of FAST and AVOD within Peacock also points to the future being maximized monetization of viewers and keeping them active in the same app for as long as possible. It won't be a surprise to see other media companies with multiple streaming services copying this approach, much as Warner Bros. Discovery has already announced for HBO Max and Discovery+.

Therefore, Peacock shouldn’t be seen as an SVOD play but a CTV-maximizer push from Comcast. Clearly, with their various ventures in the space, Comcast views CTV as a way to transition the strengths of its cable TV business into the new world.

Peacock is an integral part of that, and it should be expected to see Comcast announce more Peacock carriage deals with other MVPDs in the coming months as Comcast seeks to shore up its position in CTV.