The Price Is Right for Peacock

What do The Matrix, Parks and Recreation, and Brave New World have in common? They’re all on Peacock now. Photo: From left: Warner Bros/Kobal/Shutterstock,Colleen Hayes/NBCU Photo Bank/Getty Images, Courtesy of NBC

This is an awful time to launch a new streaming service, and yet the folks running Peacock — the NBCUniversal platform rolling out nationally today — don’t seem worried. Sure, the economy is in a coronavirus crash, reducing disposable income for millions of Americans and making it tougher to market anything besides face masks and hand sanitizer. And, yes, the digital video market has become dramatically more competitive over the past eight months, with newbies racing to take on Netflix (and begging consumers for their money in the process). But Peacock brass say they’re not stressing because their shiny, new streamer has one big advantage: It’s free.

Promos for Peacock have been pushing this singular message for weeks, no doubt because consumers who’ve been barraged by marketing for HBO Max, Disney+, Apple TV+, and Quibi have come to expect that they’ll need to shell out more coin to check out the newest kid on the streaming block. That’s not the case with the NBCUniversal service, which will make its basic version — boasting roughly 13,000 hours of content — free to anyone with an internet connection. It’s betting audiences tired of being nickeled-and-dimed by Hollywood will be willing to trade a few minutes of advertising for a free streamer that feels a lot like a paid platform. “We believe that we’ve identified this white space in the market, which is a premium, ad-supported streaming service,” says Peacock chairman Matt Strauss.

The exec, who until last year ran the Xfinity division at NBCU sibling Comcast Cable, says Peacock research points to evidence of increasing “subscription fatigue” among consumers navigating the streaming marketplace. “People, we found, were kind of questioning, How many of these services do I need to subscribe to?” Strauss says. At the same time, free, ad-supported streamers such as Pluto, Tubi, and STIRR have experienced substantial growth of late, he notes, even though none of them offer much by way of original content and feature mostly older TV shows and movies. “You’re seeing consumers willing to make trade-offs, where they’re willing to watch kind of ‘good enough’ content that’s more economical rather than having to [spend] money for another subscription service,” he says. In many ways, Strauss adds, Peacock is aiming to fill the gap left by Hulu, which in 2016 decided to get out of the free streaming TV business.

The decision to focus on free was also a concession to reality: As big as NBCUniversal is, it probably doesn’t have the financial muscle to take on Netflix, Disney, Amazon, and WarnerMedia (owner of HBO Max) in the subscription business. The Comcast-owned company also has a strong connection to the advertising business and traditional cable, two factors that made it more logical to build a free service dependent on selling commercials rather than subscriptions. And as Strauss notes, there are already a lot of major players well established in the subscription-video-on-demand space, while the aforementioned free streamers haven’t yet scaled up to anything close to what Peacock is attempting to do. So instead of trying to take on Netflix or HBO Max and their seemingly unlimited programming budgets, NBCU wants to make Peacock the Netflix of ad-supported streaming. “We’re gonna zig while others zag,” Strauss explains. “We believe that the moment is right for us to come into the market with a premium, ad-supported offering.”

That’s particularly true given the economic recession caused by the coronavirus pandemic. “The space we’ve chosen we think puts us in a very good position given the challenges that people will have coming out of this pandemic, in terms of how they choose to spend their entertainment dollars,” says Strauss’s boss, NBCUniversal television and streaming chairman Mark Lazarus. With Peacock, all that’s required of audiences is that they “spend their time and eyeballs” rather than their cash.

At least initially, Peacock’s promise of “free” will come with an asterisk. While the basic level of the service will, in fact, cost nothing, the total Peacock experience — including the full classic movie and TV library, next-day access to most NBC broadcast shows, and Peacock originals — will only be free if you have a cable or internet subscription with the initial two Peacock distribution partners, Cox and Comcast’s own Xfinity. Anyone else will have to pay $5 per month to get the so-called Peacock Premium. “If you just want to download Peacock right out of the gate, start enjoying it, and not have to worry about paying anything for it, you don’t have to,” Strauss says. But if you want to upgrade, he adds, “That choice is there.”

Consumers can pay another $5 per month for an ad-free version of the service, though you might want to be patient about that particular upgrade. Peacock is promising no more than five minutes of advertising for every hour of content you watch; with some feature films, you’ll only have to endure three minutes of commercials upfront in exchange for no ad breaks once the movie begins. By contrast, network TV bombards audiences with up to 20 minutes of advertising per hour, while 8 to 10 minutes per hour is common for many streamers with commercials.

Having two tiers obviously introduces the potential for consumer confusion: Audiences who’ve heard the messaging about “free” may start to wonder whether basic Peacock is like those supposedly free phone apps that make you pay in order to do anything valuable with them. Strauss thinks that concern will go away once consumers check out the starter level of the service. “We’re going to market with something that’s gonna feel very satisfying. It’s meant to feel like this is a really robust service,” he says. But even so, Strauss sees the multitiered structure being used at launch as a bridge to a much simpler Peacock offering, one where the distinction between basic and premium is meaningless to anyone with a cable, internet, or wireless service plan — in other words, almost everyone. “The longer-term vision is that we really believe that through bundling and through these partner integrations, both internet and pay TV, we’re going to be able to reach a majority of the country and give them some form of access to Peacock for free,” he says. Strauss thinks the deals needed to make this a reality can be hammered out over the next year to 18 months.

The slow approach to rolling out Peacock also makes sense given how parts of the platform’s launch plan got upended by COVID-19. While several splashy original series — including Brave New World (available at launch) and a new season of NBC comedy AP Bio (premiering in September) — wrapped production before the virus made filming impossible, many others have been left in limbo. “We, like almost every network and every production company, have been impacted by COVID,” Strauss says. For instance, the originally announced plan to stream full episodes of The Tonight Show Starring Jimmy Fallon and Late Night With Seth Meyers a couple of hours before they aired on NBC was shelved, at least temporarily, because remote production made it harder to get the shows edited in time for early streaming, according to Peacock execs. (Fallon returned to 30 Rock this week, but it was only with a limited staff, meaning the early stream of his show likely won’t happen until fall at the earliest.)

The biggest coronavirus-related hit, however, was the cancellation of the Summer Olympics. NBC’s broadcast and cable coverage of the Tokyo Games was supposed to serve as a massive advertisement for Peacock, while the streamer itself was set to stream a ton of Olympics-related programming. Lazarus doesn’t pretend the situation is ideal, but he also takes a glass half-full view of how things have played out. “Not having the Olympics at launch is a blessing and a curse,” he says. “Certainly it would have drawn a fair amount of eyeballs. Right now, we would have been marketing the Olympics and getting everyone to come to the Olympics, which would have served as a springboard to launch Peacock. But because the Olympics aren’t happening, a lot of that weight across our huge portfolio of businesses at NBCUniversal and Comcast is going to marketing Peacock.”

Plus, assuming things get back to some sense of normalcy next year, Peacock will benefit from NBCU’s Olympics coverage of the 2021 Summer Games and then, a few months later, the 2022 Winter Games. “We’re going to get a double dose of Olympics in a very short period of time,” Lazarus says. Having that extra promotional firepower next year — when, presumably, Peacock will have more first-run series to tout — will make this year’s Olympics delay sting a lot less. It also gives Strauss and his team more time to hammer out distribution deals to widen the number of consumers with free access to Peacock Premium, and to hopefully expand the number of devices on which users can access the app. (As with HBO Max, Roku and Amazon Fire TV have not struck carriage deals with Peacock, though Strauss says talks continue.)

While the pandemic has disrupted Peacock’s production pipeline and marketing plans, the streamer’s programming strategy hasn’t changed, execs at the company say. Because it’s a free service with ads, and a brand-new one still trying to build an audience base, Peacock content chiefs Bill McGoldrick (who oversees originals) and Frances Manfredi (who’s in charge of acquired and library shows) say they’re looking for programming that serves a wide swath of potential viewers. “The best way for us to get viewership is through broad content,” Manfredi says, explaining that as Peacock gets more data about who’s watching the service and how they watch it, there’ll be an opportunity to use that information to target specific segments of the audience with “really niche” content. “But for right now, since we don’t have the information we need, being broad is probably the best way for us to go in the most and certainly the most cost-effective,” he says.

Early on, that wide focus has translated into Peacock green-lighting projects based on well-known intellectual property (much of it owned by NBCU), such as continuations of Saved by the Bell, Punky Brewster, Psych, Battlestar Galactica, Trolls, and Madagascar. “We think that those titles can generate buzz and attention for a streamer,” McGoldrick says, adding that the hope is that “buzzy IP remakes will cause customers to really need to sign up for the service.” Peacock’s development team also took a close look at the library shows headed to the service — including The Office (coming next year), Parks and Recreation, and 30 Rock (both available at launch) — and green-lit new shows that would appeal to fans of those classic series. “We went out to Ed Helms and Mike Schur and Tina Fey because we think they fit nicely in that category,” McGoldrick said. Fey and Meredith Scardino are working on a comedy called Girls5Eva, while Schur, Helms, and Sierra Teller Ornelas have teamed up for the half-hour Rutherford Falls.

Similarly, Peacock’s library of classic movies and TV shows will boast a something-for-everyone feel, though balanced with a “commitment to quality,” Manfredi says. “We’ve identified viewership breaks that take into consideration demographic and psychographic information — young men and women, older men and women, kids and teens, Spanish language, African-American,” she says. Peacock then went looking for programming in multiple genres to appeal to these various categories of viewers, mixing shows from the NBCU library and content acquired from outside companies. “So for young men, it would be comedies like the soon-to-come Office and Brooklyn Nine-Nine. We have unscripted content like Storage Wars. Films that would hit that particular break would be Fast & Furious, the Bourne franchise, The Big Lebowski. We have that same cross-genre approach to each of the breaks that we’ve identified,” Manfredi explains.

Spending money to grab titles from other conglomerates — such as Yellowstone, from ViacomCBS-owned Paramount Network, or History’s Pawn Stars — wasn’t just about appealing to key demographic groups. It was also part of a bigger effort to make sure Peacock wouldn’t be simply dismissed as an extension of the NBC broadcast network, a philosophical approach that even extends to the platform’s name. “We made the strategic decision to not call ourselves NBC Plus,” Strauss says. “While we want to pay homage to our heritage — we certainly want to leverage the fact that we’ve got access to this quality catalogue of programming — the real opportunity is to build upon that, and look at this more through the lens of an aggregation platform.”

Of course, it’s possible audiences overwhelmed by streaming options might not want yet another Big Media Brand to choose from when they sit down in front of the TV, even if the service is free. And while Peacock is undeniably raising the stakes in the free, ad-supported streaming space, it will soon have some serious competition. WarnerMedia has said it will launch a free version of HBO Max next year, and Amazon is investing heavily in its free IMDb TV platform, spending big on library titles such as Mad Men and even dipping its toes into original series with its acquisition this week of spy thriller Alex Rider. ViacomCBS also continues to add thousands of hours of CBS and MTV content to its free Pluto service. Still, there’s reason to be optimistic about Peacock’s potential: It has a head start on its (free) rivals, the distribution power of Comcast and Cox, and the marketing muscle of the NBCU bilingual broadcast and cable empire. “We think we’ve got a recipe that’s gonna really resonate in the market,” Strauss says.