Peacock Chairman Details What's Working at NBCU's Streamer Ahead of National Launch

Peacock Investor Day Publicity 2- H 2020
Courtesy of Jason Hoffman/Peacock

Exec Matt Strauss says that viewers have been flocking to the channels option, which "really reinforced our hypothesis that cord cutters like linear lean-back TV, as well."

When Peacock chairman Matt Strauss demoed the streaming service on stage for investors in January, he was really just presenting a vision for the product. "It was not what we had built," he says. But the Peacock that launches nationally July 15 will look remarkably close to that initial plan — something of a feat given that much of the work on the app took place as the novel coronavirus extended its grip over the world.

"No one could have anticipated a global pandemic," says Strauss during a call from the New Jersey home where he's been isolating, "but, at the same time, we recognize that it could be an opportunity for us because you've got so many people sheltering in place."

The former Comcast Xfinity executive is zooming toward Peacock's launch with the benefit of a little hindsight. The NBCUniversal-owned service already rolled out for Comcast customers — sans any Peacock original programming — on April 15. What he's learned over the past three months is that viewers are clamoring for familiarity. So, Peacock has been curating recent sitcom classics like Two and a Half Men, King of Queens and Everybody Loves Raymond.

Viewers, particularly non-cable subscribers accessing Peacock via their Comcast Flex internet plans, also have been streaming the service's channels (which mimic the lean-back experience of live TV) 10 times more than Xfinity cable subscribers. "It just really reinforced our hypothesis that cord cutters like linear lean-back TV, as well," says Strauss, adding that Peacock plans to double the number of such channels it offers to 40 for the service's national rollout.

The curated channels have been central to Peacock's pitch to potential customers, something that Strauss says helps the service stand out in a world where having a seamless on-demand experience is "table stakes." Another feature, called trending, allows Peacock to program of-the-moment clips like trending Saturday Night Live sketches or breaking news segments instead of years-old movies and TV shows — which the service also has.   

When Peacock launched in April, the trending page was the first thing that viewers saw. But, Strauss says, his team quickly learned that people were firing up the app to escape the deluge of news about current events. So, they began to program that section of the app with a greater focus on positive content. And now, opening the Peacock app will deliver viewers to a more familiar browsing experience instead. "We recognized that trending is a longer-term ambition," Strauss explains. "Some people really liked it and other people really were kind of jarred."

Peacock is the last of the major streaming services from traditional entertainment companies to roll out widely. Disney+ launched in November and HBO Max made its debut at the end of May. But it's also taking a different approach to the subscription video model. A basic version of Peacock — one that offers 13,000 hours of programming but not marquee originals and most live sports — will be available for free. An upgrade to the premium version, which will have the full content offering, will cost $5 per month. It will cost an additional $5 per month to upgrade to an ad-free version of the service.

NBCUniversal has inked deals with parent company Comcast and Cox to give their customers access to the ad-supported version of Peacock Premium at no extra charge. (Like all subscribers, they will have to pay an additional $5 per month to remove the ads.)

Free could be a selling point for customers, particularly during the current novel coronavirus-driven economic downturn. A Deloitte media trends survey released at the end of June found that people pay for an average of four subscription services. And for a quarter of subscribers, free or discounted rates were a big factor in choosing a paid streaming service. 

Kevin Westcott, who leads Deloitte's telecom, media and entertainment group as vice chairman, says streamers with both ad-supported and ad-free pricing tiers can be attractive for potential customers. "It gives the consumers a little more control," he says. "I think the hybrid model is something that consumers will be drawn to."

But launching with several different offerings, particularly a freemium model where customers will have to pay to watch heavily promoted originals like dystopian drama Brave New World, also has the potential to cause customer confusion. "There's no question that we're a new brand and there's going to have to be an education on what we're offering," Strauss concedes. "We're trying to do it in a way that makes it as frictionless as possible. Allowing somebody to download an app and not have to enter a credit card and just start enjoying video, that is a very clear value proposition."   

Based on the current deals with Comcast and Cox, 24 million people will be able to sign up for Peacock Premium at no cost, Strauss says. NBCU will look to strike similar deals with other distributors so that, eventually, it can grow the pool of Peacock Premium subscribers who are accessing the service for free.

So far, the company is being conservative with its goals. Executives have said they hope to have between 30 million and 35 million subscribers by 2024. (Disney, for comparison, said it was looking to attract between 60 million and 90 million subscribers for Disney+ within its first five years. The service added nearly 55 million subscribers within its first six months.)

One challenge that Peacock faces in amassing subscribers is that NBCU doesn't yet have deals with Roku or Amazon to offer the app on their devices, which make up more than two-thirds of the connect TV market in the U.S. CNBC reported that negotiations center around who controls the Peacock advertising inventory and user data.

Strauss says he anticipated that Peacock would not be available on every platform at launch but, he added, "People who've purchased these devices have done so on the premise that they're going to get access to apps. I don't know if it's fully appreciated that if Peacock is not available on a platform, it's not because we didn’t make it available and it's not because we didn't make it available for free."

NBCUniversal is planning to put its full marketing muscle behind the Peacock launch, touting the service across its portfolio of linear TV networks and digital properties like Fandango. (One major promotional vehicle, the Tokyo Olympics, has been pushed to 2021.) In cheeky pun-heavy marketing materials, the streamer has leaned into its positioning as a free or low-cost option in a saturated streaming landscape. "It represents the personality of the service," says Strauss. "Like, in many ways, I'm giving streaming the bird. We're going to shake things up."