NBC’s streaming platform Peacock had a mixed second quarter.
The streaming wars are often cast as a cut-throat competition between powerful companies for the future of the entertainment industry. And while there’s a level of truth to that, it also’s a bit overblown. This is not a take-no-prisoners situation, and there’s room for several levels of streaming services.
While it’s not been having a great year, Netflix (NFLX) – Get Netflix Inc. Report is still the biggest streaming service, as none of the other competitors can boast subscription numbers in the 220 million range. But Disney+ (DIS) – Get The Walt Disney Company Report is breathing down its neck, and Warner Bros Discovery (WBD) – Get Warner Bros. Discovery Inc. Report has plans for HBO Max to more aggressively take on its top two competitors. (It’s a shame that those plans don’t include Samantha Bee.)
After you get past the big three, there are two other levels.
The extremely niche sites that aren’t super big, thrive by targeting one specific type of customer and have no desire to conquer the game; the two most obvious examples of this class of streamer are The Criterion Channel (which targets cinephiles) and Shudder (which bathes in the screams of horror fans).
Then there’s the middle tier, at least in terms of subscriber totals. (Which streaming services lead in terms of quality is a completely different discussion.)
It’s very strange to think that a streaming service owned by a gigantic telecommunications conglomerate such as Comcast (CMCSA) – Get Comcast Corporation Class A Common Stock Report, the second-largest broadcast and cable company in the world, is technically an underdog.
But that’s undeniably the case with the streaming service Peacock. The service launched in the summer of 2020, and it’s been doing just fine. Not amazing, not catastrophic. Just fine.
And as revealed in Comcast’s second-quarter earnings report, that just fine status isn’t changing anytime soon. Heck, not much has changed for the service at all in the past few months.
But that might not be anything for Comcast to worry about just yet.
Peacock’s Subscription Growth Is Flat
In the first-quarter earnings report of the year, Comcast said that it had 28 million subscribers, 13 million of which are paying customers.
In the second quarter of this year, that total now stands at 27 million subscribers, 13 million of which are paying customers. Comcast also said that Peacock’s losses widened to $467 million from an adjusted EBITDA loss of $363 million in 2021.
So the subscription numbers are flat, and revenue is down. But Comcast executives expected all of this.
Peacock still has nine million more paid subscribers than it did at the end of 2021. The main drivers were Super Bowl LVI and the Beijing Winter Olympics, both of which streamed on the service. And surely hardcore fans of Jennifer Lopez tuned in to watch her rom-com “Marry Me,” which premiered on the service the same day it hit theaters.
So these subscription numbers weren’t a shock, as the company knew it didn’t have anything on that level in the second quarter, and warned investors of such during the first quarter earnings call, with Comcast noting in its letter to shareholders that its “very strong first quarter that was driven by a variety of extraordinary programming,”
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Comcast Isn’t Sweating About Peacock
While Peacock’s numbers aren’t amazing, Comcast doesn’t appear worried, because it has a major advantage over most of the other streaming services.
While Netflix and Disney+ are still sorting out their cheaper, advertising supported-tier, and HBO Max’s has only launched this summer, Peacock has that all figured out.
When Peacock launched, it was available with a free, advertising-supported option. It also came with a $4.99 a month option that cut down on most of the ads, and gave access to things like exclusive seasons of the cult-comedy “A.P. Bio” and super-sized edits of “The Office.” And then there was a $9.99 option that got rid of ads all together.
So even though Peacock’s subscriber numbers aren’t going to make Disney sweat, its revenue numbers from advertising give it a boost. (Did we mention they had the Super Bowl?)
Comcast doesn’t think of Peacock as a separate business, but as part of their overall portfolio that includes NBC, MSNBC and SKY. And taken together, the advertising revenue continues to justify investing in Peacock.
“We had the benefit of studying the market before we came in and we think we picked the right business strategy, which is kind of an extension of our existing business, not a new business, but based on a dual revenue stream of subscription and advertising,” NBCU CEO Jeff Shell said during Comcast’s earnings.
“And I think everybody kind of moving in that direction is a validation of that business model. As far as advertising in general, our business, linear and Peacock, we’re one of the largest advertisers out there with over $10 billion advertising.”
