Well, so much for the “broadcast” model for the likes of NBCUniversal’s Peacock. That “free” TV ad-supported service is no longer available for new customers.
Back in 2019, Steve Burke, then CEO of NBCU, referred to Peacock as “the equivalent of a 21st-century broadcast business.”
Thus, NBC's effort to build its direct-to-consumer business based only on advertising support -- which at the time was not the intended or preferred model for streaming platforms.
Peacock put great emphasis on the broadcasting model where TV has been essentially free and ad-supported.
It turns out that Burke was right. And wrong.
With regard to the latter, financial considerations -- involving steep losses in building new streaming services --- are weighing heavy on the business now. So drop the free stuff.
Give NBCU credit, then -- particularly in light of all the growth of advertising-supported streaming otherwise known at FAST channels (Free Ad-Supported Television) -- especially coming with still free streaming video-on-demand platforms like Tubi and Pluto TV.
The difference between the others and Peacock is that they are built largely on library content. Those services are not of the level of the premium individual streaming apps from major studios.
Big, high-profile streaming platforms spend billions of dollars a year on original streaming programming -- anywhere from $5 billion to $10 billion on average.
Collectively, Netflix, Amazon Prime Video, Peacock, HBO Max, and Disney+ and others are estimated to spend around $50 billion on content.
And of course, that's the rub for NBC's change. Recently the NBC said that in Q4 2022, it posted a net loss of $978 million in its direct-to-consumer business.
Why, then, couldn't Peacock just raise prices for its other subscription options?
Peacock, while growing, is still way behind other big services: Disney+, HBO Max, Amazon Prime Video and of course, Netflix. Raising prices for essentially still a startup would be tough to do in a marketplace that, for all intents and purposes, is contracting.
What remains for Peacock are two services.
Peacock Premium offers much more than the departed free Peacock, which had restrictions on the number of TV episodes available.
Peacock Premium is a $4.99 plan -- full on-demand library, live sports, and NBC programming. Peacock Premium+ goes for $9.99 a month with no-ads.
The bottom line is that Peacock’s dropped free option may have been a significant piece of the business.
Back in October 2022, NBCUniversal CEO Jeff Shell said Peacock had 15 million paid subscribers and 30 million monthly active accounts.
The definition of "monthly active accounts" can be a combination of paid and non-paying Peacock subscribers, which would include the free Peacock plan the company just eliminated.
So the main question now is: Can NBC convert those “monthly active accounts” -- and new customers -- into paying subscribers.As many columnists and bloggers might say: Stay tuned. But.. wait. This isn't broadcasting anymore.
Wayne, once cable arrived on the scene and gained a fair measure of penetration---by the mid 1980s----most consumers have been paying for broadcast TV via cable systems and satellite distributors---the exceptions being those homes that had over-the-air reception---now about 15% but only ten years ago roughly 8-9%. When the broadcast TV networks finally wised up---about fifteen years ago---and demanded that, like the cable channels, they receive re-transmission fees (paid to the stations but shared with the networks )----these payments---paid for by consumers-----have been critical to the broadcast TV nets' and stations' profits. So NBC's decision to start charging new subs to its Peacock streaming service is not an abandonment of its broadcast business model at all. It merely reflects the high costs of playing the Netflix-style streaming game which is now being modified to place much less emphasis on pricey Hollywood "originals" to lure subscribers and much more on the totality of the libraries being offered---mostly featuring "linear TV" content.