Comcast’s Peacock Needs To Think Bigger

NBC’s streaming service has plenty of great shows; now it needs hits.

In a recent earnings call, Comcast reported that its streaming service Peacock had 28 million subscribers, 13 million of whom are paying customers, in its first quarter of the year. 

In the second quarter of 2022, it reported that it had 27 million subscribers, 13 million of whom are paying customers.

So clearly, subscriber growth is flat at the moment. What’s more, Comcast  (CMCSA) – Get Comcast Corporation Class A Common Stock Report executives attributed much of that growth to sporting events such as Super Bowl LVI and the Beijing Winter Olympics, both of which streamed on the service. Unfortunately, they don’t happen every quarter.

So why is Peacock’s growth so sluggish, especially compared to the triple digit subscriber numbers boasted by Disney +  (DIS) – Get The Walt Disney Company Report and Netflix  (NFLX) – Get Netflix Inc. Report?

Well, increased competition in the streaming world is a big part of it, and Disney and Netflix just have a more recognizable brand name.

But perhaps part of the problem is Peacock’s original shows, which, to be clear, are on the whole very good. But they might not be what Comcast needs right now.

A Brief History Of Peacock

At some point, all of the traditional television networks figured out that Netflix had become a giant competitor to their business, largely by offering affordable access to their television and film back catalogs. 

NBC in particular had a vested interest in building their own platform, as younger millennials were turning some of their titles into monster hits for Netflix, with episodes “Friends” and “The Office” becoming far more popular than any of NBC’s then current sitcoms. 

In 2019, it all hit a bit of a tipping point, with Vulture asking the question “Is Friends Still the Most Popular Show on TV?”  The Gen-Z musical icon Billie Eilish sampled dialogue from an “Office” episode and put it to a beat on her Grammy-winning debut album “When We All Fall Asleep, Where Do We Go?” 

You’d really have to be asleep at the wheel not to notice that sort of thing. 

But when Peacock launched in the summer of 2020, it had a good news and bad news situation. The good news was that with people stuck indoors, they were more hungry for distractions than ever, and plenty of viewers were willing to sign up for a free, advertiser-supported service to watch some old movies.

The bad news was that thanks to the COVID-19 pandemic, the live sporting events that Peacock was counting on as audience drivers were put on pause, including the Tokyo Olympics. NBC also wasn’t able to produce new episodes of popular shows such as “Law & Order: Special Victims Unit” or “Brooklyn Nine-Nine,” for a while, so it had to rely on news, catalog titles and a modest handful of original content for most of 2020. 


Peacock’s Plans For The Future

Peacock is an outgrowth of NBC, which at the risk of being very reductive, has always had a two-prong strategy.

NBC’s unofficial brand for its shows has long been smart and quasi-metropolitan, which usually meant urban crime procedurals such as the “Law & Order” franchises, or sitcoms about neurotic people who lives in big cities, such as “Seinfeld,” “Frasier” and “Friends.” 

During the later half of the ’2000s, devices such as TiVo, the explosion of internet piracy and the rise of DVD box sets and iTunes selling episodes of television and increased competition from cable all began to seriously eat into network television’s bottom line. 

By the end of the decade, NBC found itself seemingly unable to launch new, broadly appealing, mainstream hits, other than spin-offs of its “Law & Order” franchises installments.

Instead, it’s line-up became filled with quirky sitcoms such as “30 Rock,” “Community” and “Parks and Recreation,” all of which were critically acclaimed shows with devoted fanbases that never translated into big ratings for NBC. But the network didn’t have any real alternatives on hand either, so the shows kept getting renewed, partially in an effort to have content to license to streaming services.

The most cynical critics (or television executive) might scoff that being smart and artsy is a great way to go over your audience’s head and get your show canceled, but that’s not true.

But what is true is that smart, witty shows do need a bit of breathing room to find their audience, as they often lack the more eye-catching narrative hook of, say, a show called “American Ninja Warrior.”

Quality sells itself, over time. Clever shows such as“Seinfeld” and “The Office” were little watched in their early seasons, but later became cornerstones of the network’s programing. “Parks And Recreation” was always in danger of being canceled, but its popularity on Netflix and on social media prompted NBC to give it seven seasons, and now “Galentine’s Day” is an unofficial holiday.

But NBC also hedged its best by having broadly appealing, populist fare, such as “Saturday Night Live,” “The Tonight Show” and spectacle driven TV shows such as “The Blacklist.”

History Repeats

Right now, Peacock finds itself in a similar situation to where NBC was in the late ’00s. The streaming service’s one big swing at a sci-fi/adventure series (something NBC has been chasing with mixed results since “Lost”) was an adaptation of “Brave New World,” which was cancelled months after its premiere. 

But at the moment its collection of original scripted material is defined by, again, quirky and critically acclaimed series that harken back to its old modus operandi, including the musical comedy “Girls5eva,” which is executive produced by “30 Rock” creator Tina Fey, and the small-town comedy “Rutherford Falls,” which is co-created by “Parks and Recreation” co-creator Michael Schur. 

“Killing It,” featuring Craig Robinson, is a hilarious satire of the working class getting the short end of the stick in modern society. It hasn’t really caught on yet, but the potential is there for it to grow into a hit, if Peacock can afford to be patient. 

But can it? These shows fit the NBC brand and have found a warm embrace on social media and may even earn Emmys, considering their creative pedigree. But, and this is no slight, they’re not the ratings drivers Peacock needs at the moment. 

Comcast plans to increase its spending on Peacock content to $3 billion this year, and will eventually ramp up to $5 billion, all while it contemplates expanding Peacock beyond the U.S. on a country-by-country basis. Reclaiming exclusive streaming rights to signature shows such as “Saturday Night Live” should help.

So while Peacock is struggling at the moment, Comcast still views it as early days and is still willing to double down on its investment. It’s great that the streaming service continues in NBC’s spirt of smart comedies. But how about it hedges its bets by rebooting “ER”? Everyone used to watch that show.

Related Posts

Union Capital Financial Group Ltd, registered in the British Virgin Islands, does not provide investment services inside the United States. The company only provides consulting, advisory and educational services.