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Plucking the Peacock: In Killing the Free Tier, Did NBCU Make a Mistake?

IndieWire 2/3/2023 Tony Maglio

Peacock’s three-tiered approach to streaming was innovative. It was also a total accident.

Following its failure with Seeso, NBCUniversal was poised to re-enter streaming just in time for the 2020 Summer Olympics. Peacock was also a silly name, but at least it had NBC-mascot brand recognition. Just one problem: No Summer Olympics.

The early stages of Covid canceled everything in the spring 2020 and the pandemic pushed the Summer Games into 2021. Without value-adding originals and no Tokyo opening ceremony, NBCU was forced to launch its Peacock platform… for free. On January 31, the company finally righted that wrong and withdrew the option for new users. That announcement came mere days after Peacock finally crossed 2o million paid subscribers — and reported a 2022 loss of $2.5 billion.

Timing aside, this transition to the original two-tiered subscription-revenue model ($4.99/month for ad-supported “Premium” and $9.99 for ad-free “Premium Plus”) was “always built into the plan,” a person with knowledge of the decision told IndieWire. NBCU “earmarked” this timing a while back, our source said, and the free tier started to unwind in earnest months ago, when Peacock began slowly moving “The Office” and other content from free to paid.

NBCUniversal is also beginning to unbundle free Peacock “Premium” from the cable packages of Comcast and Cox (and smaller regional companies) in the first half of 2023. The service remains available to customers, of course; they’ll just have to pay for it.

Freecock served its purpose. It brought a bunch of people into the ecosystem, which is Step 1 of the oft-repeated streaming mantra “scale, then monetize.” IndieWire is told there is no immediate plan to shut down free Peacock for the millions of people still on the tier, or for those who churn out of paid and land in free.

“Angelyne” - Credit: Isabella Vosmikova/Peacock © Isabella Vosmikova/Peacock “Angelyne” - Credit: Isabella Vosmikova/Peacock Isabella Vosmikova/Peacock

Still, news of the sudden elimination of Peacock’s free, ad-supported streaming television (FAST) tier was a surprising strategy shift. “I wouldn’t have done it,” said Colin Dixon, founder and chief analyst of NScreenMedia. “I think that they have a winning strategy — it’s working. They’re seeing great growth in both premium subscribers and in free users, and why on earth would you stop?”

Alan Wolk, co-founder and lead analyst at TVREV, told IndieWire that with the benefit of some time to think, he gets it. The logic may lie in the other FAST service under Comcast’s overall umbrella, Xumo Play. A few years ago, Pluto TV, Tubi, and Xumo were the three most relevant FAST services available. Since then, ViacomCBS (now Paramount Global) bought Pluto in 2019 and in early 2020 Comcast acquired Xumo, shortly before Fox snatched up Tubi.

After Charter cut Comcast a check for $900 million, Xumo became a joint venture, shifted to the device-making, and rebranded its FAST service Xumo Play. (Think of Xumo and Xumo Play sort of like Roku and the Roku Channel.) One global pandemic later, Pluto TV is massive, Tubi is thriving, and Xumo Play is an “also-ran,” in Dixon’s estimation. (Have you heard of it?)

While Xumo toiled in what Wolk slightly more favorably referred to as “limbo land,” free Peacock continued to grow. Per a TiVo Video Trends survey published in the middle of 2022, Peacock was the No. 3 AVOD/FAST service, behind only the Roku Channel and Tubi. Xumo Play didn’t even make the Top 15.

Reps at both NBCUniversal and Comcast told IndieWire that there was no coordination of the Peacock decision with the Xumo joint venture. Despite sharing Comcast ownership, they are separate operations. This may be Comcast’s chance to rewrite history — and to make something out of Xumo.

Peacock - Credit: NBCUniversal © Provided by IndieWire Peacock - Credit: NBCUniversal NBCUniversal

“They basically looked at what Amazon, Vizio, LG, Samsung did,” Wolk said. “They all have their own FAST at the heart of their operating ecosystem; you turn on a Vizio TV, you see WatchFree, and then you see a whole bunch of other stuff. So it drives traffic to WatchFree, but it also allows them to sell ads to HBO, and to Amazon, and to Netflix to promote their shows… it’s a nice revenue stream.”

One thing Wolk and Dixon agree on is Xumo’s potential importance to that burgeoning in-screen advertising market. Wolk called smart-TV operating system (tvOS) selection the industry’s “next big battle.”

“Whoever owns the operating system gets to decide what services are on the TV, what order they’re in, how they’re promoting them,” he said. “There’s a lot of value in owning that, plus all the data they collect.”

There’s also value in owning what Comcast/NBCU currently doesn’t own, so could NBCUniversal’s newfound FAST opening be filled through acquisition? Wolk doesn’t see it happening. However, Dixon theorized that if Xumo Play is not the new Freecock, and should the M&A chatter about Comcast eyeing Paramount Global or Warner Bros. Discovery never come to fruition, NBCU might aim for Roku or even Chicken Soup for the Soul (for its Crackle).

Or NBCUniversal, moving forward, just stays free of free.

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