• by Karlene Lukovitz , November 3, 2021

NBCUniversal is losing more than $8 on each of its approximately 21.5 million monthly active users, putting it far away at present from the $7 to $8 average monthly revenue needed to reach its projection of breaking even by 2024, according to an analysis by LightShed Partners media analyst Richard Greenfield.

Last week, during Comcast’s third-quarter earnings call, NBCUniversal reported that its new Peacock streaming service lost $520 million in adjusted revenue during the quarter.

CEO Jeff Shell assured investors that “everything on Peacock is heading in the right direction, and there is really nothing from a trajectory perspective that is any different from what it was last quarter... All metrics are pointed up: our usage continues to be great, our mix of users.”

Shell said Peacock added “a few million more” to the 20 million monthly active accounts it reported for Q2, but did not provide specific numbers.

NBCU says that Peacock is on track to reach its target of 30 million to 35 million users by its projected breakeven year, 2024.

But 84% of users of Peacock’s Premium and Premium Plus tiers (priced at $4.99 and $9.99 per month) are getting it no extra cost as part of their Comcast and Cox cable subscriptions, and a third of monthly active accounts (MAAs) are using the free tier, Greenfield said in note to investors first reported on by NextTV.

Assuming Peacock had 21.5 million MAAs in Q3, its average revenue per user (ARPU) was about $3.56 for the quarter, he estimates. 

“Peacock spent $750 million this past quarter to only generate $230 million of revenue," Greenfield wrote. "If the key problem is not having enough paying subs... and engagement to drive advertising ARPU, the clear answer becomes Peacock needs far more content than it is currently offering"...

Greenfield added that he believes Peacock can be successful as a hybrid advertising/subscription service, but only if NBCU makes "dramatically" higher investments in the service. Breakeven isn't likely to be achieved even at a $7 ARPU across 35 million users.

The bottom line, Greenfield argues, is that investors "should be prepared for far greater Peacock investment spending over the next few years if [it] wants to be a 'top four, must-have' streaming service."

Greenfield also said he believes that Peacock would be “far more successful” if Comcast opted to release all Universal movies on Peacock simultaneously with theaters (day-and-date release), rather than just shorten the theatrical window before films are accessible on the streaming service.

All of the major entertainment players are making huge early investments in streaming, which are supposed to pay off in ongoing profits over the long term — and Peacock is by no means alone in showing large losses in its early days. For instance, HBO Max costs drove a $1.2-billion revenue loss at WarnerMedia in Q4 2019 alone, prior to its launch in May 2020.