December 11, 2019
Comcast chief financial officer Mike Cavanagh announced that the Philadelphia-based telecom giant plans to invest $2 billion in NBCUniversal’s streaming service Peacock during 2020 and 2021, with the expectation that it won’t be profitable for five years. Cavanagh, who spoke at the UBS Global TMT Conference in New York City, added that the spending will represent, at its height, only about 1 percent of Comcast’s annual revenue. Comcast pay-TV subscribers will have free access to Peacock, scheduled to debut in April 2020.
Variety reports that “the partially ad-supported Peacock … will also be available for a fee to non-Comcast television subscribers, but Cavanagh didn’t disclose any info on pricing.” He did say that there will be “different pricing schemes,” and that advertising “will make the price to consumers sensible.”
“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.” He noted that, according to Comcast research, 80 percent of those queried are interested in a premium VOD service with “reasonable amount of ads.”
Comcast will provide more details about what to expect with Peacock at a January 16, 2020 investor meeting. In reference to Peacock reaching a break-even point in its fifth year, Cavanagh pointed to “Comcast’s upfront costs for the Xfinity Mobile virtual wireless service, in which the operator invested close to 1 percent of total revenue and is expected to be at break-even in 2021.” Comcast’s broadband business is “on track to generate $26 billion in revenue this year and will add as much as $2 billion in incremental revenue in 2020.”
Content aggregation, including for Xfinity TV and the Xfinity Flex video for broadband customers, is the second biggest priority. “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,” he said. “We’re not going to chase unprofitable relationships but rather figure out ways to give consumers choices.”
Peacock will stream “The Office,” “Parks and Recreation,” and “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’.”
Peacock will also offer original movies from Universal Pictures, Focus Features and DreamWorks Animation, and “will draw on NBCU’s news, sports, cable unscripted and Spanish-language divisions for additional programming.”