Why Comcast's Peacock is betting aggressively on free users with a model that's more Spotify than Netflix
- NBCUniversal's flagship streaming service, Peacock, lands nationally on July 15, with a free tier and two subscription plans.
- Peacock chairman Matt Strauss said its Spotify-like freemium model is even more relevant amid the global pandemic, as economic uncertainty looms and people spend more time streaming in lockdown.
- Strauss said Peacock is working to strike deals to make the paid version of platform available to more people for free, as well.
- After three months of testing the service among Comcast customers, Strauss said Peacock is also doubling the number of linear channels in the platform, and rethinking how it programs its Trending section.
- Strauss said Peacock surpassed in 60 days its year-end targets for metrics including monthly active users, though did not share specific numbers. The company previously said it aimed to reach 30 to 35 million monthly active users by 2024.
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Shortly after the coronavirus pandemic hit, the team behind NBCUniversal's upcoming flagship streaming service, Peacock, began holding virtual all-hands meetings twice a week.
A topic of discussion during the meetings was the mindset that consumers might be in when the platform rolled out nationally on July 15, amid growing economic uncertainty and a crowded streaming-video market.
The Comcast-owned platform had announced in January plans for a freemium model, similar to Spotify, that would include a free tier of content with ads, as well as a $5-per-month subscription with more programming including originals like the upcoming series "Brave New World," and a $10-per-month version without ads.
The company says it's even more confident in that strategy now with the current economic instability.
"This notion of launching a free service that's premium, we think is incredibly relevant," Matt Strauss, chairman of Peacock and NBCUniversal Digital Enterprises, told Business Insider. "It's more relevant now than even where we thought six or so months ago."
Peacock has been pushing its free offering heavily in its launch marketing. Its tagline is: "Watch for free. Upgrade for more."
Rival subscription services like HBO Max, Disney Plus, and Apple TV Plus are available for free or cheap through distribution deals or limited promotions to some customers, but they are paid platforms at their cores. Peacock is hoping to the avoid the subscription fatigue it suspects competitors are facing by offering a free way to watch with little-to-no strings attached.
"There's just a lot of friction that we were identifying in the market," Strauss said. "We saw through research that people were getting frustrated with how many services they had to subscribe to. They were kind of popping in and out of these services, based on whether they want to watch a buzzy original … or they might've been getting it on a promotion and not realizing it was a promotion."
Peacock is also beefing up its library, which includes NBCUniversal-owned movies and TV shows and content licensed from third parties, to make sure free offering is robust.
The free version was expected to launch with 7,500 hours of programming, half the volume in the paid plan, but Strauss said the volume of free content in July will be "significantly higher" than what was announced. The company recently struck a licensing deal with ViacomCBS that will add to the programming on both Peacock's free and paid tiers, for example.
Peacock is also trying to make its "paid" platform available to more people for "free" through bundling deals.
Strauss, who was previously an exec at Comcast, said Peacock is working to bundle its premium version with other services. It has deals in place with with its cable-giant parent Comcast, and Cox, which Strauss says will reach 24 million people in the US combined.
"Fast forward 12 to 18 months, we really believe that you're going to see a very large portion of the country that's going to have access to the premium version of Peacock for free through bundling," Strauss said.
After its Comcast trial run, Peacock leaned into linear channels and rethought how to program its Trending section
Peacock has been testing its service for the past three months among certain Comcast customers who pay for its Xfinity X1 cable service or use its Flex streaming device with its broadband offering. Those roughly 15 million customers have been able to access the paid, ad-supported version of Peacock for free since April 15. The Peacock app is automatically loaded onto those devices and integrated into the programming guides, the way apps including Netflix and Hulu are.
Free seems to be working for those customers, too. Strauss said Peacock surpassed within 60 days its year-end targets for metrics, including monthly active accounts, time spent viewing, and frequency and repeat usage. He did not share the figures, however.
Previously, the company said it was targeting 30 million to 35 million monthly active accounts on Peacock by 2024.
Strauss said Peacock's test run likely benefitted from the rise in streaming viewing during lockdown that has helped others in the industry, as well as the company's marketing, product, and content strategies.
As part of a cable company, Peacock been trying to toe the line between streaming video and the legacy-TV ecosystem that the broader business relies on. The platform strives to serve as both a complement to traditional-TV packages, and a destination for cord-cutters who get their entertainment primarily from streaming platforms like Netflix, Hulu, and Amazon Prime Video.
To better reach cord cutters, Strauss said Peacock is leaning more into programmed channels that are dedicated to properties, like "Saturday Night Live" and "The Office," or talent like Jimmy Fallon. The concept, which Strauss likens to Spotify playlists, is similar to the linear channels offered by free, ad-supported streaming-TV services like Pluto TV and Xumo. (Comcast also acquired Xumo this year.)
Strauss said usage of Peacock's channels was ten times higher among Comcast's Flex customers (who don't have a traditional TV package) as its X1 cable customers during the beta period.
"X1, if you're familiar with X1, is really geared towards the pay-TV subscriber," Strauss said. "What we didn't know was that if we created these linear channels, would they resonate or not with a cord cutting segment? And what we found is that they are over-indexing."
Peacock created 20 channels, but now plans to launch closer to 40 by July, and up to 60 by year's end, Strauss said.
However, Peacock could be in the same pickle AT&T's HBO Max was at launch if it isn't available on major streaming devices Roku and Amazon Fire TVs. The company has said it will be accessible on Apple and Android devices, among others, but has not yet announced distribution on Roku and Amazon devices.
Peacock's leadership has demonstrated its ability to pivot in other areas. Peacock found from its initial roll out that it needed to rethink how it programs its Trending section, which is editorially driven but will become personalized to users over time. When the pandemic hit, for example, people were watching the news more often, but many viewers also wanted an escape.
The company quickly struck a deal with Seth McFarland to produce a daily variety show that was featured in the Trending section, and worked with "Saturday Night Live" to incorporate some of its most popular sketches and monologues.
"We've learned a lot and we've had to make changes along the way," Strauss said, "but I think one of the strengths of a new organization is having that flexibility to be able to make those kinds of pivots, and do it in a way where you can quickly learn and make changes."
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