Comcast said it will be doubling down on its money-losing streaming service Peacock.
The company reported that Peacock lost $1.7 billion in 2021 and is expected to lose $2.5 billion in 2022 as the company increases spending on programming from $1.5 billion to $3 billion.
The announcement comes as Wall Street has turned more skeptical that investments in streaming will turn out to be a good investment.
On Comcast’s earnings call Thursday, CEO Brian Roberts said Peacock had the right business model, with its combination of subscription and ad supported offerings.
Roberts said Peacock finished 2021 with 24.5 million monthly active accounts in the U.S., which represented about 75% of how many the company expected to have by 2024.
He said that over those 24.5 million users, more than 9 million were paid subscribers, generating average revenue per unit of $10 per month. Another 7 million are people who have premium subscriptions free through their cable subscriptions to Xfinity and other operators.
“We expect strong conversion of this group to paid subscribers over time,” Roberts said.
Roberts said that the vast majority of paid Peacock subscribers have chosen the $5 option with ads as opposed to the $10 ad-free product.
“We think the most valuable end state for Peacock is to have two revenue streams,” he said.
Roberts said that across NBCUniversal and Sky, the company spends about $20 billion on programming and will be increasing that investment in part to grow paid Peacock subscriber.
Comcast CFO Michael Cavanaugh said that Peacock content spending was $1.5 billion in 2021 and would be doubling to $3 billion this year and increasing to more than $5 billion “over the next couple of years.”
He said some of that added programming spending would be incremental, while some represented spending shifting from the company’s linear networks.
Cavanaugh said that the additional programming spending would mean it would take longer than expected for Peacock to break even.
“The good news is we can fund this pivot out of NBCU’s cash flow,” he said. ■
Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
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