So it's charging a relatively high price considering the subpar perceived value of the content.Ĭomcast's conservativeness with Peacock may ultimately cost it.
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If Comcast offered the service for free to everyone, it could accelerate cord-cutting - much to the detriment of the overall business. Peacock seems more positioned as an extra source of on-demand content for Comcast subscribers, and may appeal less to cord-cutters. To be sure, Cavanagh's forecast implies it won't see a lot of paid subscribers compared to Disney or WarnerMedia. Consumers will pay slightly more for a more attractive slate of content and completely forego Peacock even if it's priced below the competition. Even HBO Max's $14.99 per month price is tiny compared to the average cable bill. If the content isn't engaging enough to drive viewership comparable to Hulu for customers that get the service free, how can it expect consumers to pay anything for it when there are better options?Īll of the streaming competitors are relatively inexpensive. That highlights an interesting challenge for Peacock. That's less than half of what Hulu generates in ad revenue per subscriber. To reach $1 billion in annual revenue, it would only need to generate a little over $4 per existing subscriber. Goldman Sachs CEO David Solomon said Tuesday that asset management and wealth management would be the growth engine for the bank after his efforts in consumer finance went awry. Peacock will launch with 20 million subscribers built in from Comcast's video subscriber base. That suggests annual revenue between $1 billion and $2 billion.īut those numbers also suggest Cavanagh doesn't expect very high levels of engagement for subscribers. He also forecasts that the service will break even by year five.
But management's outlook for the service suggests engagement will be relatively low.Ĭomcast CFO Mike Cavanagh said at an investor conference earlier this month that the company will invest about $2 billion, ramping quickly, over the first two years of launching Peacock. With a focus on ad-supported streaming, NBCUniversal is betting big on driving engagement in order to generate revenue. Can Peacock drive enough engagement to compete? AT&T's planning an ad-supported version of HBO Max for that reason. Disney notably generates much higher revenue from the ad-supported Hulu than the ad-free version despite the $6 per month price differential. Indeed, it's not unlikely Comcast can generate higher revenue per subscriber with ads than with the higher-priced ad-free version.
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