Peacock To Get $2B Investment In First Two Years, Turn Profit In Year 5, Comcast CFO Says
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Comcast’s forthcoming entry into the intensifying streaming competition, Peacock, will be profitable within five years and have $2 billion in content and marketing investment in its first two years.
The outlook on the streaming service’s launch next April was provided by Comcast CFO Mike Cavanagh in an appearance at the UBS Global TMT Conference in New York.
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He confirmed that the ad-supported platform will be free for Comcast customers, with “various pricing tiers” for other subscribers. While he didn’t offer any guidance on pricing, he said revenue from advertising will enable Comcast to “make the price to consumers sensible.”
Peacock is joining a crowded marketplace. Disney and Apple just launched new subscription outlets, at far lower price points than Netflix, the market leader whose most popular level of service costs $13 a month. HBO Max will debut next May at $15 a month.
Cavanagh noted that a full tour through the investment strategy and consumer pitch of Peacock has been scheduled for January 16. But speaking from the C-suite of the parent company, he noted that the $2 billion infusion is just 1% of annual earnings, comparable to the level of Xfinity Mobile, a previous new venture by Comcast.
The Peacock effort will entail a “lower cumulative loss or investment than what you otherwise might see in other places, but obviously that’s with the opportunity to rely on advertising, ramp through distribution partnerships,” Cavanagh said.
The $2 billion, he noted, is heavily weighted toward content spending. NBCU earlier this year announced The Office, a popular title on Netflix, will be coming to Peacock in a $500 million deal.
Netflix has been pouring money into programming and marketing, with annual content spending now approaching $15 billion. Traditional media companies have been promoting cumulative figures approaching Netflix levels for their overall programming spending. The major caveats that apply with those figures, though, include the fact that many of those titles air on linear channels or get licensed to third parties. The figures also include live sports, a business segment Netflix has expressed no interest in entering.
Peacock, Cavanagh said, would not be a risky venture. “We’re not looking to play somebody else’s hand. I think our approach to Peacock is a thoughtful consideration of our strengths and opportunities to put together a plan that, in success, will put us in a really good place. Success is ours if we get it right and it’s worth pursuing.”
He added, “Consumer demand will be there. Clearly, advertisers will be looking for opportunities to reach audiences.”
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