Confronted with a question increasingly on investors’ minds — namely, is streaming a real business? — Comcast CEO Brian Roberts made the case that for his company it is.
“You got to be able to make money and you’ve got to have a roadmap to get there. And we believe we can do that,” the exec said during a keynote conversation at the Morgan Stanley Technology, Media & Telecom Conference.
Comcast’s NBCUniversal division launched direct-to-consumer streaming service Peacock in mid-2020. It has managed to get about 24.5 million monthly active users as of the end of 2021, which is ahead of internal projections but far from the top echelon of streaming. About 9 million of regular users are stand-alone subscribers paying $5 a month (or $10 without ads) for Peacock Premium. Another 7 million get the premium service bundled with their pay-TV or broadband subscriptions. While the initial strategic focus was on Peacock’s free, ad-supported tier given NBCU’s advertising clout, Comcast has recently pledged to drive harder toward the subscription side.
“The take rate led us to say that the sweet spot as we think of it as a business will be to go with the dual revenue stream,” Roberts said. Advertising revenue combined with subscriptions have yielded more than $10 per user, he noted.
As far as spending, Comcast said on its most recent earnings call that it plans to boost Peacock spending to $3 billion this year, about double the level for 2021. Roberts indicated that the increase did not mean a net additional outlay of a billion and a half, but rather a reallocation within the overall budget as streaming continues to pull focus across the industry.
“We have about $20 billion a year in content spend between Sky and NBCUniversal,” he said. “And we ought to – in addition to some increase in that, we ought to be able to repurpose a lot of that toward helping Peacock make money.”
Expenses on streaming, along with uneven subscriber numbers, have prompted Wall Street to punish certain stocks of late. Netflix shares got pummeled, losing 25% of their value in a single day after the company reported a slight subscriber miss and a muted outlook for the current quarter back in January. Paramount Global, as the former ViacomCBS is now known, saw its stock take a hit nearly as big on the day after executives outlined their streaming strategy.
For now, of course, Peacock is in the red, though that’s in keeping with initial projections from Comcast during its January 2020 investor day ahead of the launch. In 2021, losses for Peacock hit $1.7 billion, though the effects of the pandemic on original programming and sports certainly hampered subscriber acquisition efforts.
Peacock, which benefits from its Sky division in the UK and Europe as well as Comcast’s U.S.-leading cable system and millions of broadband-only video customers, now reaches about 70% of global markets. “Of the remaining 30% of the world, we will probably look to partnerships” like the joint venture established with Paramount Global in Europe, Roberts said.
As to whether NBCU considers itself a supplier of programming to the open market or a direct pipeline to Peacock, Roberts said, “It’s somewhere in between.” He cited The Gilded Age on HBO as an example of a high-profile show the company is making for a rival company, WarnerMedia. “I think we clearly want to focus on building Peacock and, therefore, that’s the first look and the first home, but we’re very much a provider of content.”
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