NBCU Pulls Plug On Peacock's Free Tier For New Subscribers

Comcast's NBCUniversal has quietly eliminated Peacock’s free, ad-supported tier for new subscribers, although those already registered can continue using it, at least for now. 

Prospective new subscribers are now offered just two choices instead of the three that have been available since Peacock’s launch in spring 2020: The “Premium” ad-supported tier, normally $4.99 per month, or the ad-free Premium Plus, priced at $9.99 per month (screen capture above). 

However, an apparently limited-time discounted offer is being promoted for new Premium subscribers: a full year for $29.99, or 40% of the standard $49.99 per year. 

To minimize churn, in addition to existing registrants, the free tier will also be made available to current Premium subscribers who cancel, and users who were until recently  getting the Premium tier free, such as Cox internet customers, according to The Streamable, which first reported the free tier’s elimination with NBCU. 

NBCU confirmed the move, and said in a statement that it is part of a “shift in focus” toward Peacock’s paid plans because these “create the best experience for a majority of viewers.” 

The streamer’s total content hours are expected to reach 100,000 during 2023 (up from about 80,000), and both paid tiers will offer popular current shows such as the new “Poker Face,” as well as continue to offer live sports including Sunday Night Football, Premier League soccer and Women’s World Cup, and a large library of on-demand movies and shows such as “The Office” and “Yellowstone.” 

Peacock’s free tier does not include live sports streaming. It also lacks access to new content added to Peacock after airing on NBC, and access to the newest movies, the most popular shows (like “Yellowstone”) and some on-demand episodes of shows including “The Office.” Only select episodes of Peacock originals are offered. Overall, the free tier offers about two-thirds of the service’s total catalog.

Dropping the free tier — whose reach does contribute to generating ad revenue — is something of a risk for NBCU and parent Comcast, and counter to the trend among competitors. For example, just this week, Warner Bros. Discovery announced deals to syndicate its content through free, ad-supported TV channels (FASTs) on the Roku Channel and Tubi.

Comcast did not provide a total subscriber/user target for Peacock at launch, and its sluggish growth -- particularly in comparison to also relatively new competitors like Disney+ --  has been a focus of negative press coverage.

Last week, Comcast generated more positive focus when it reported that Peacock more than doubled its paid subscribers during 2022, to 20 million.

Peacock is still far smaller than Netflix, Disney+, Amazon Prime Video and other major rivals. And at least one analyst, LightShed's Richard Greenfield, has argued that the streamer's number of subscribers isn't as important as its low audience engagement numbers, such as daily time spent watching per subscriber.

Peacock also still has large numbers of nonpaid users. Peacock reported 15 million paid subscribers as of Q3 2022, but had 30 million total users/monthly active accounts at the time, according to Variety.

However, now that Peacock has reached significant paid scale, Comcast has clearly determined that monetizing the paid stream is the right strategy for the long term, even if millions of free users defect in the short term.

In addition to eliminating the free tier for new prospects, and recently ending free access to Peacock Premium for Cox cable and internet customers, NBCU CEO Jeffrey Shell has made it clear that the company plans to eliminate free Premium access for Comcast’s own Xfinity customers. The bets are that this will happen within the next 12 months.

Although increased expenses caused Peacock’s substantial losses to widen in Q4 to $978 million — up from $559 million in Q4 2021 — Comcast said it expects the losses to peak this year at about $3 billion, then “steadily improve.”

Peacock’s annual revenue nearly tripled in 2022, to $2.1 billion, and it helped drive a 4% gain in advertising for NBCUniversal’s media unit, to $2.86 million, according to Comcast/NBCU. “It’s very clear we picked the right business model,” Shell declared in the Q4 earnings call. “We made that investment... and made clear from the start we’re going to make a return on that investment. I think we feel better about that now.”

In fact, Comcast has been doubling down on investments to enhance Peacock’s appeal to subscribers — and presumably improve audience engagement and advertising growth.

In addition to increasing its content offerings, Comcast has added live access to NBC local affiliates in 210 markets for Premium Plus subscribers, and live access to Hallmark channels for Premium subscribers, and is expected to add five regional sports networks sometime in 2023.

At the same time, NBCU has just announced that it plans to triple its already substantial investments in data, measurement and ad-tech products for its unified cross-platform advertising sales One Platform, streamline its brand and media agency teams operations, and add media and tech expertise across the platform’s teams.

Next story loading loading..