Comcast released an extensive earnings report that covered its various businesses which include movie studios, TV networks, theme parks, streaming services and more. On the whole, it was pretty good news for the entertainment giant which brought in more than $30B in Q4 revenue and more than $3B in profit, but that doesn’t mean every single division is soaring. Peacock Network, Comcast’s much-publicized move into the streaming space, is not exactly competing with the major players yet. In fact, it apparently lost $1.7B in 2021.
All of the above information and more came out in an earnings call Comcast executives had with investors today. According to Variety, they were extremely transparent with a lot of Peacock specific numbers. Apparently the streaming service has 24.5M active accounts, but only 9M of those are paying subscribers. Many others receive the service for free through Xfinity bundles and other offerings (which is the same sort of problem Apple+ is navigating). Of those 9 million who pay, the service reportedly averages about $10 per user between paid subscriptions and ad sales.
A $1.7B loss would be enough to have companies frantically jumping off the boat in most industries, but it’s important to point that that the streaming business is not necessarily like other businesses. A lot of the major streaming services carried losses for an extensive period of time, and many are still struggling to be profitable. Competition for subscribers is very intense, and the major players spend staggering amounts of money on content to keep their customers happy. Netflix reportedly spent $17B in 2021 on content. Disney has vowed to spend $33B on content in 2022, though not all of that is earmarked for Disney+ and Hulu.
Regardless, the competition is very intense, and at this point, Peacock is a smaller player actively trying to grow. It reportedly spent $1.5B on content in 2021 and will double that in 2022. Comcast expects this’ll mean Peacock Network will lose even more money next year, probably around $2.5B, but the conglomerate is hoping the service will be profitable by 2025.
Peacock does have some reasons to be optimistic looking forward. It controls The Office, which is widely considered to be one of the more valuable sitcom properties. It signed a deal with WWE to host all of the sports-entertainment company’s PPVs, as well as its back catalog, and NBCUniversal, which is also owned by Comcast, has a lot of content it can feature. There is a base to build off. With a few good series, the streaming service could grow quickly.
It needs a breakout show though. A minimum number of subscribers will be there for all of the reasons mentioned above, but Peacock needs a buzzy show everyone is talking about. It needs a Squid Game or Ted Lasso to convince people who already have a few streaming services to potentially give up one to try Peacock. That means being a part of the conversation and having some new, original content that cuts through the noise.
Peacock can get there. If Comcast is willing to continue losing billions and investing to this degree, it’s only a matter of time before the hits start coming. Forward momentum is almost certainly going to happen, but it’s a long way between 9M paying subscribers and being anywhere close to Disney+, Netflix, both of which have more than a hundred million subscribers. We’ll just have to wait and see if Comcast and Peacock Network can make it that far.
