Deeper Dive—Can Peacock meet its goals for active users, revenue?

Peacock first arrives on April 15 for Comcast Xfinity X1 and Flex subscribers. (Comcast/NBCUniversal)

Comcast and NBCUniversal officially welcomed Peacock into the world this week, and set subscriber growth and financial stabilization goals for the ad-supported streaming service.

Peacock is launching April 15 on Comcast’s X1 and Flex platforms before it becomes more widely available on July 15. The service has a free tier available to everyone and a premium tier that costs $4.99 per month with advertising (or $9.99/month with no ads.) Premium – which includes access to Peacock original content, next-day streaming of current series episodes, early access to late night shows and sports including Premier League soccer – will be made available for free to 24 million Comcast and Cox subscribers.

With the particulars set and an expansive content lineup in place, Comcast felt comfortable making some projections for Peacock’s near-term future. The company expects the service to attract 30 million to 35 million active accounts in the U.S., $2.5 billion in revenue with $6 to $7 ARPU driven mostly by advertising, and breakeven adjusted EBITDA, all by 2024.

Let’s look at the advantages and challenges Comcast can expect as it works toward hitting those goals:

Active users

Comcast should get a big boost in attaining its 30 million to 35 million active user goal by offering Peacock Premium for free Comcast and Cox subscribers. Even if only 50% of those subscribers regularly use Peacock, that will already put the service at 12 million active users and well on its way to 30 million.

Attracting more active users could become more of an uphill battle after the initial launch but Steve Burke, chairman of NBCUniversal, sounded confident that Peacock would find distribution with other pay TV operators including AT&T, Charter and Verizon.

“I almost don’t see why the cable industry wouldn’t work with us. We’re giving the product, which has value, to them for free to give to their consumers. I don’t understand the catch,” Burke said on Thursday during a Peacock investor event. He said that NBCUniversal has a lot of cable deals coming up for renegotiation next year and that he had a feeling Peacock would get broader distribution.

“But if we don’t, we want this product to be broadly distributed at the price point of zero, and the way to do that is to find really good marketing partners who are interested in delivering value to their customers. And if, for whatever reason, we don’t get that with the traditional ecosystem, you know Disney+ is being offered to a lot of Verizon customers for free. I think that’s a very attractive model we’d look at, too.”

In 2020, NBCU will focus on growing Peacock in the U.S. but in 2021, the company said it will begin looking into expanding the service into international markets. That kind of potential expansion combined with a large install base in the U.S. and a compelling, free price point makes it seem possible that Peacock will reach its active user goal in four years.


Getting lots of takers for a freebie is one thing but finding a way to effectively monetize that audience is another. Peacock will sell subscriptions but Comcast’s plan is to have the service occupy the “ad-supported premium content” space in the streaming video market, which is fairly wide open despite hybrid AVOD/SVOD services like CBS All Access and Hulu. The company is expecting the bulk of Peacock’s revenue to come from advertising.

Toward that end, NBC is bringing in partners and planning to use a lot of new ad formats. Linda Yaccarino, chairman of advertising and partnerships at NBCUniversal, outlined the plan on Thursday.

She said Peacock will have the lowest ad loads in the industry and that NBC is working on improving frequency caps so consumers don’t see the ads repeatedly. She said Peacock has signed on inaugural launch partners including Target, State Farm and Unilever. Those brands will get “first-mover benefits” and they have committed “hundreds of millions” to advertising on Peacock. The sponsors will also promote Peacock through their own channels and will be members of the Peacock Streaming Council, which will meet to discuss and test new advertising innovations.

Peacock will use advertising formats including ShoppableTV, binge ads and pause ads along with several new formats that Yaccarino unveils at the event. Solo ads will allow brands to show entire episodes with just one ad; explore ads will include contextual data and special offers for consumers; and on command ads will use voice activation to direct viewers toward e-commerce and other offers.

The advertising opportunity, coupled with any incremental subscription fees, has some analysts believing that Comcast’s $2.5 billion projection for 2024 will be easily met.

“We believe this revenue forecast is very conservative. $2.5B represents ~2% of CMCSA’s total revenue today. From advertising alone, we think it will have the ability to get there, not including any real contribution from paying subs,” wrote Jennifer Fritzsche, senior analyst at Wells Fargo, in a research note.

Adjusted EBITDA

Peacock’s ad-supported focus differs from the subscription streaming efforts put forth by NBC peers Disney and WarnerMedia. It could be construed as being more conservative than Disney’s approach, which is banking on subscription dollars while forgoing some affiliate and licensing revenue.

“Disney has lit money on fire. Investors are embracing it for now. Comcast’s approach is far less expensive,” said Rich Greenfield, media analyst at Lightshed. He further told CNBC that Comcast is doing “exactly what they should be doing to leverage their assets.”

Indeed, Comcast is using many of NBCUniversal’s best IP including its film library and television series. There will be lots of new, original content on Peacock but Fritzche said the value of the service “resides in many of the shows [Comcast] already owns and controls.”

That strategy also helps restrain the content investment Comcast needs to make in Peacock. Peacock will spend about $2 billion on content over the next two years, which pales in comparison to the $6.5 billion Amazon Prime Video or the $17 billion Netflix is expected to spend.

Overall, it seems like the goals that Comcast should be able to meet or exceed the goals it’s set for Peacock.