Peacock’s Rise Goes to Show There’s More Than One Path to Streaming Success
Peacock may be slightly behind some competitors in terms of profitability, but it has a solid plan to get there that stands apart from other streamers.
Content-wise, the past year has been a monumental one for NBCUniversal’s streaming service Peacock. The platform became the first on-demand streamer to host an exclusive NFL playoff game in January, and original content like the “Five Nights at Freddy's” movie and shows such as “Poker Face” helped make 2023 an important year for the streamer. Financially speaking, Peacock may be a bit behind the competition when it comes to showing a profit, but its plan to achieve that goal is much different than that of industry rivals like Disney+, Max, and Netflix.
- Peacock is climbing toward profitability after hitting peak losses in 2023.
- The streamer launched in 2020 with two ad-supported options, an important driver of average revenue per user.
- NBCU is determined to build the streamer, but not at the expense of linear networks.
To be sure, Peacock’s bigger streaming brethren have come a long way from where they were at the beginning of 2023. Disney+ and Max were still losing tens of millions of dollars per quarter on streaming at that time, but these days the picture is quite different. Disney expects to show a streaming profit by its fiscal fourth quarter this year, and Warner Bros. Discovery announced its streaming segment had made $103 million in profit last year.
Peacock’s financials are not quite at the same level. It lost $2.7 billion in 2023, more than any other service and more than its 2022 losses of $2.5 billion. But that’s in line with the company’s goal to peak its losses in 2023, and start building toward profitability this year. It also saw its revenues jump by 62% year-over-year to $3.4 billion, the largest revenue percentage jump of any streamer in 2023. Net revenue losses in the fourth quarter were cut to $825 million, after reaching $978 million in the same period in 2022, showing that Peacock is indeed on the right track.
The streamer ended 2023 with 30 million subscribers, and while that is significantly less than the biggest players in the space, NBCU collects an impressive average revenue per user (ARPU) for these customers. Comcast President Mike Cavanaugh recently revealed that Peacock brings in $10 per subscriber, nearly $2 more per customer than Disney+ currently averages. It’s an impressive figure, and NBCU can thank the fact that it launched Peacock in 2020 with not one, but two ad-supported plans for such a high rate.
Ad plans allow streamers to collect not only subscription revenue but also income from advertisers based on the number of customers watching ads on the service. When Peacock first became available, it had a paid ad-supported plan and a free, ad-supported tier with a smaller selection of content. Though the streamer eventually discontinued its free tier, it was years ahead of Netflix and Disney+ in offering a paid, ad-supported plan, which is a big reason why its ARPU is so high today.
Thus far, Peacock has also eschewed unpopular measures like password-sharing crackdowns and high-profile content removals. WBD was first to the content-cuts party in 2022, removing TV shows from its streamers and canceling films in various stages of production to help bring down costs. WBD meaningfully reduced its losses by doing this, and in 2023 Disney and Paramount both followed by removing select titles from their streaming libraries. If Peacock has made similar removals it has done so quietly and has spared high-profile titles from any such culls.
It was Netflix that got the ball rolling with password-sharing restrictions, as it introduced rules to prevent American customers from using each others’ login credentials in May 2023. Disney and WBD have pledged to do likewise, but there has been no corresponding pledge from Peacock to this point. A crackdown on password-sharing could come to NBCU’s streamer in the future, but as of now, there is no such plan.
When Will Peacock Show a Profit?
It’s apparent that Peacock is on a strong path to profitability, one that differs highly from the tactics used by competitors. Cavanaugh said that the company plans to make a “meaningful improvement” on Peacock’s losses in 2024, and a December report from Ampere Analysis predicts that Peacock will achieve profitability by the first quarter of 2025. By 2028, it will bring in a profit of more than $700 million per year, according to the forecast.
Cavanaugh’s strategy for continuing to grow Peacock will also look different than his streaming rivals. He’s emphasized that Comcast plans to continue managing its TV business and its streaming segment as a single unit; by contrast, Disney CEO Bob Iger called linear TV a “no-growth” business last July and has made it clear his company will be emphasizing its streamers as a primary delivery mode of entertainment going forward.
“I’m less focused on what standalone Peacock losses are doing than I am on doing what’s right for the long term for the totality of the media business, which is linear and streaming,” Cavanagh said in an earnings report conference call. “I think we’ve navigated a very good path for us.”
This all-encompassing strategy makes sense for Comcast because the company is a TV and broadband provider at the same time. Linear channels and pay-TV plans are still an important revenue generator despite the fact that Comcast lost more than 2 million cable customers in 2023. The company has more than 32 million internet customers, giving it a chance to try and sell departing cable customers a Peacock subscription as they walk out the door. As it continues to scale Peacock, the ad money brought in by its linear channels and the subscription dollars from its cable customers will be crucial for NBCU.
Whether examining Peacock’s past or its future, it’s clear the streamer has not simply copied the blueprints of its predecessors in seeking profitability. Peacock has always been comfortable going its own way, and even though it isn’t profitable quite yet, it’s proven that there’s more than one way for a streamer to become successful.
Peacock
Peacock is a subscription video streaming service from NBCUniversal that includes original shows, blockbuster movies, and classic television series. Peacock is home to “Yellowstone,” and “The Office,” as well as original hits like “Poker Face” and “Bel-Air.” You can also watch live sports including NFL, MLB, WWE, Olympics, Premier League, NASCAR, French Open, College Football and Basketball, and PGA Tour. Premium Plus subscribers can stream their local NBC feed in all 210 markets.