As the coronavirus crisis keeps consumers stuck at home, Comcast will launch its new video streaming service Wednesday to millions of its cable and internet customers.
The streaming service, called Peacock, will be available at no additional charge to Xfinity customers using its X1 TV platform and Flex streaming device. Peacock will launch nationwide on July 15, when it will offer a free tier and a premium version with more content for $4.99 a month, both with advertisements.
Comcast customers will be able to pay $5 a month to watch Peacock with no ads, while everyone else will pay $9.99 for ad-free streaming.
The Philadelphia cable giant is entering a crowded streaming market dominated by the likes of Netflix, Hulu, and Amazon, at a time when the U.S. economy is facing an unprecedented recession and companies are pulling back on advertising.
And unlike some streaming rivals, Peacock will be supported by advertisements. Rather than seek more revenue from consumers through higher subscription fees, Comcast hopes to lure viewers with cheap or free content and show them ads.
During a conference call with reporters Tuesday, Comcast executives said their approach could work well at a time when many are stuck at home and on tighter budgets. The company said on-demand consumption is up 50% year-over-year for the week ending March 29, and voice remote searches for free content are up almost 250%.
“We all know there’s a lot of turbulence and uncertainty in the economy," said Matt Strauss, chairman of Peacock and NBCUniversal Digital Enterprises. “Amid what was already a growing wave of subscription fatigue when it comes to streaming services, delivering Peacock, a quality, ad-supported streaming platform that is free, is arguably more relevant now than at any other moment in time.”
The streaming service will feature 15,000 hours of content, largely from the NBCUniversal library, from the Friday Night Lights TV series to the Jurassic Park film franchise. Peacock will also have live news, linear channels, and access to The Tonight Show Starring Jimmy Fallon and Late Night with Seth Meyers, hours before they air on TV.
Although the pandemic may give consumers a reason to try Peacock, the outbreak did disrupt Comcast’s plans to roll out the product.
The coronavirus forced the International Olympic Committee to postpone the Summer Games in Tokyo. NBCUniversal owns the broadcast rights for the Olympics and planned to use the event to promote Peacock.
The pandemic has also paused production of original series that are set to air exclusively on Peacock, Strauss said. Everyone on the Peacock staff is working from home, but Strauss said the service is still on schedule to be launched nationwide on time in July.
Peacock will air roughly five minutes of commercials an hour. Comcast has booked ads from 10 sponsors, including State Farm, Target, Capital One, and Subaru.
Strauss said there are no material changes to the financial guidance or targets the company provided in January, when Comcast said it expects to reach about 35 million active accounts by 2024. By then, the company estimates, Peacock will generate $2.5 billion in revenue.
Asked how the pandemic and free-falling economy could affect advertising, Strauss said launch sponsors signed up for long-term deals, though he wouldn’t share more information.
“We really believe there is this void of premium ad-supported content in the streaming market,” he said.
On Tuesday, Publicis Groupe, one of the world’s largest ad-agency conglomerates, told the Wall Street Journal that it expects the pullback in ad spending to be worse than during the 2008-09 financial crisis, when ad buys shrunk 10%. That sentiment was echoed in Interactive Advertising Bureau’s survey of almost 390 media buyers, media planners, and brand executives, which found that 44% expected the impact on advertising to be “substantially worse” than in 2009.
Comcast is embracing streaming as its customers flee costlier pay TV. In 2019, Comcast reported losing 733,000 TV customers. At the same time, Comcast’s broadband business has boomed, signing up 1.4 million new high-speed internet customers last year.
The company now gives internet-only customers a streaming box called Flex that comes with a voice remote. By bundling Flex with Peacock, Comcast steers customers who don’t want traditional TV to its own cord-cutting option.