Peacock is to refocus its strategy towards its ad-supported offering and has committed to double its content spend to $3bn in 2022.
The Comcast-owned streamer will promote its $5 a month mid-range subscription offering over its $10 a month ad-free service after the “vast majority” of its subscribers opt for the ad-supported option.
The strategy shift is supported by Comcast research that showed 80% of consumers prefer an ad-supported service over a higher cost ad-free SVOD service.
As of Comcast’s Q4 2021 results, Peacock reached 24.5 million monthly active accounts and 9 million paid subscribers. To reach its goal of 34 million by 2024, Comcast will increase investment by reallocating cash away from its linear programming.
Beyond 2022’s $3bn cash injection, Comcast will up its annual budget to $5bn in the years after. Comcast expects the increase in content and marketing spend will lead to an EBITDA loss of about $2.5 bn.
Launched in 2020, Peacock offers three tiers – a free AVOD option with fewer titles; a middle tier with a “lighter” number of ads and access to premium content; and an ad-free option with access to all titles.
“What we have learned so far is that we started with the right business model,” said Comcast chief executive officer Ben Roberts. “We think the most valuable end state for Peacock is to have two revenue streams.”
To investors, Roberts said: “With over 300m hours of content consumed on Peacock a month – the engagement with our platform has proven extremely valuable to advertisers.“
Peacock launched on Sky in the UK and Ireland in the backend of 2021 – Germany, Austria and Italy are up next on its international rollout.
Michael Cavanagh, chief financial officer at Comcast, said it would be “disciplined” in its international expansion. “We are going to look to partnerships on a bespoke country-by-country basis as we expand internationally,” he said. “We are going to get to a global scale, but we are looking to do that in a more measured, country-by-country way and we are optimistic that we can get there.”