As almost any striking actor or writer has learned over the past few months, how Wall Street and the investment community defines success is a lot different than the barometers their world tends to use. Awards, critical acclaim, buzz and, in many cases, even actual audience, publicly available or not, is secondary to the perception of economic efficiency, upside and, most of all, bettering the “expectations” of the genuises that set the bar each quarter.
It certainly seems to be the framing for recaps like this that dropped yesterday from INVESTOPEDIA’s Nathan Reiss on the heels of Comcast’s 3Q23 investor call:
- Comcast reported better-than-expected third-quarter earnings with adjusted net income rising 6.2% to $4.48 billion or $1.08 per share.
- Theme parks and Peacock streaming revenue helped Comcast’s earnings beat.
- Robust paid subscriber growth and higher prices for Peacock boosted streaming revenue.
Yep, at least a few miles south of Rockefeller Center, Peacock’s a hit. As Reiss continued:
Peacock was a bright spot for Comcast, adding 4 million subscribers in the quarter and taking the total to 28 million paid customers, roughly 80% higher than a year ago. Higher pricing for the streaming service also boosted revenue to $830 million, a 64% increase from the prior-year quarter.
But INDIE WIRE’s Tony Maglio put that $830M revenue figure into a more somber, yet realistic context:
Peacock lost $565 million from June to September — a financial improvement over prior quarters — while adding 4 million subscribers. The NBCUniversal streaming service ended September 2023 with 28 million subs.
The vast majority of Peacock users subscribe to its cheaper, ad-supported tier ($5.99 per month vs. $11.99 ad-free). Like so many major streamers did throughout 2023, Peacock raised rates in July. Peacock posted $830 million in revenue in the third quarter.
Previously, Peacock lost $651 million from April to June and $704 million from January to March. Parent company Comcast expects it will post $2.8 billion in streaming losses this year; some rough math means Peacock will likely lose about $880 million in the fourth quarter, when pricey sports rights and other content costs are realized.
Yes, much as anyone who lives in frigid climates will attest, a lower negative is progress to some extent. But to call a trend that sees a bottom line move from $-704M to -$651M to -$565M a “bright spot”? And all but telegraph that in February that number will be the worst performing quarter of the entire year?
I suppose in a world where analysts were raised with participation trophies in school and youth sports, and where rival companies send out press releases bragging about “tightest gap in x years” , there’s some justification for optimism. Their bosses seem to think so. Per Maglio:
Chairman and CEO Brian L. Roberts touted “strong financial results” and a “healthy balance sheet” in remarks accompanying the Q3 financials. He singled out Peacock’s “paid subscriber and financial metrics” as having “materially improved.”
And as the HOLLYWOOD REPORTER’s Etan Vlessing added, Roberts’ newly installed corporate lackey piled on to the praise:
Comcast Corp. president Mike Cavanagh on a morning analyst call said the media giant was sticking to its plans for Peacock to anchor its transition to the streaming space from legacy linear TV networks. “We continue to be pleased with our progress in the few short years since we’ve pivoted our streaming strategy as a result of the ownership changes at Hulu,” he said as Comcast execs predicted an improved financial performance for Peacock into 2024.
And Roberts doubled down on exactly what he sees driving those better days ahead, with the same reason for the upcoming quarter’s projected downturn being cited as THE reason for his optimism:
Roberts on the analyst call declined to comment when asked about media speculation that pro sport leagues like NBA and NFL may invest in Disney’s ESPN service as it searches for strategic partners. But he did argue live TV sports on Peacock, including with its upcoming 2024 Paris Olympics coverage, underpinned his company’s growing focus on streaming live sports to engage and retain viewers.
“A big part of that is a commitment and belief that we see all sports finding a way over the next years to be more and more streamed. And that’s going to require more bandwidth. And that’s going to require and create an opportunity for us to have the superior product in the market. That’s our strategy and sports really is at the heart and soul of a lot of what we do,” Roberts told analysts about leaning into sports on Peacock, with additional benefits for the company’s broadband Internet strategy.
If this sounds like a familiar strategy, it’s because a signifcant part of Peacock’s initial growth spurt was attributed to NBCU’s belated Olympic coverage from Tokyo in the summer of 2021, with 9 million subscribers ostensibly signing on as a result. But as Zippia’s Elsie Boskamp unpacked, those numbers, and indeed Peacock’s overall current levels, are conflated with subscribers to some of Comcast’s more traditional offerings:
Millions of Peacock subscribers get the streaming platform’s second-tier service for free through their Xfinity membership. Xfinity users have been the key to driving Peacock’s subscription numbers, as the platform has over 21 million subscribers, according to Comcast.
And in the summer of 2021, there was a more opportunistic landscape for something like the Olympics to make a dent. The time differential made those games more of a home-viewing proposition than will the more modest time differential between the U.S. and France. More people were still essentially home-bound than now– indeed, yesterday’s reports cited the reality of the diminishing desire for Comcast’s work-from-home setups as the reason for the decline of 18,000 residential broadband customers. But as the same analysts cited, direct competitors to Comcast such as Verizon grew their own bases, largely by undercutting Comcast’s pricing. And the majority of the most popular Olympic events will, as always be airing on NBC and its cable networks. Just like the overwhelming majority of Peacock’s other content. Including what they see as drives like SUNDAY NIGHT FOOTBALL and PREMIER LEAGUE SOCCER, seasonal offerings that are often cited by churners are reasons they don’t stick around. And Zippia survey data shows that even the most fertile audiences are anything but clamoring to sign up:
PEACOCK SUBSCRIBERS BY AGE GROUP
|Generation||Likely To Subscribe||Unlikely To Subscribe||Don’t Know|
Indeed, unlike Apple or even Hulu, Peacock original content has been largely unsuccessful enough to not be renewed, and as of now NBCU has declined to take down the majority of those failures from the platform. So a significant portion of its 15,000 hours of content is comprised of mistakes such as reboots of SAVED BY THE BELL, QUEER AS FOLK and PUNKY BREWSTER, ill-fated IP expansions such as PITCH PERFECT: BUMPER IN BERLIN and MACGRUBER, and many other one or two-and-dones such as GIRLS5EVA, RUTHERFORD FALLS and VAMPIRE ACADEMY.
What Comcast is banking on is an exclusive NFL playoff game which will air in January. More than likely, this will be a game that tended to air in late afternoons on NBC, often involving the smaller-market and least compelling matchups and will still be carried in their home markets on over-the-air NBC stations. Already, the growing reality that a playoff game will be offering on a streaming platform only is causing backlash and concern by hard-core NFL fans. And in order for this strategy to truly work, they will need something compelling to show up on their screens to potentially drive them to watch more. This fall, that’s been the John Wick world miniseries THE CONTINENTAL, which merely put me to sleep. The most anticipated new title for winter that will actually be available is a new season of THE REAL HOUSEWIVES’ ULTIMATE GIRLS TRIP. I’m not sticking around for that, either/
So, as a couple of Peacock’s more prized talents often asked, REALLY?
You call all of this a win?
I wish I operated in a world and a time where losing over half a billion fit that bill.
I still do.
Until next time…