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By Lillian Rizzo
Comcast Corp. is planning to spend $2 billion over the next two years on content and marketing for Peacock, its new streaming service set to debut in April, the company's finance chief said Monday.
Major media and entertainment companies are investing heavily to create new shows and launch their own services. AT&T Inc.'s WarnerMedia said it would spend $2 billion next year to launch HBO Max and another $1 billion for each of the following two years. Walt Disney Co. expects to spend more than $1 billion on Disney+ in the fiscal year ending next September.
Unlike many of its rivals, which also include Netflix Inc., Amazon.com Inc., Disney's Hulu and Apple Inc., Comcast's Peacock is planning to rely more heavily on advertising than on subscriptions.
Comcast believes there is a need for additional advertising-supported services as the market becomes saturated with more subscription-based streaming services on top of traditional pay-TV, Chief Financial Officer Michael Cavanagh said Monday at the UBS Global TMT Conference.
Peacock, which will offer a library of classic shows such as "The Office" and "Cheers," as well as original content, is expected to mainly rely on an ad-supported business model.
Comcast pay-TV or broadband subscribers will receive Peacock for free. The company is also working to reach deals with other cable providers that would allow it to be free as well to additional pay-TV customers.
Mr. Cavanagh said the company was also considering offering different subscription tiers. More details about Peacock will be released on Jan. 16 when the company unveils its plans to investors, he said.
In the various pricing tiers Comcast is still considering, one idea would be to offer a limited, free version with ads meant to attract customers, although it might not have certain hit shows or might offer only a limited number of episodes, The Wall Street Journal previously reported. Another option would be a modest subscription fee with all content available with ads, and a third possibility would be a modest subscription fee without advertising.
The goal is for Peacock to reach break-even in its fifth year on the market, Mr. Cavanagh said.
Disney has said it expects Disney+ to have between 60 million and 90 million subscribers by the end of fiscal 2024, at which point it should achieve profitability. More than 10 million people signed up for the $6.99-a-month streaming service on its launch day last month.
Apple recently launched its streaming service Apple TV+ in November, featuring original content including "The Morning Show" and "Snoopy in Space," undercutting competitors with a $4.99-a-month subscription -- or a free subscription for a year with the purchase of a new iPhone, iPad or Mac. The company initially set a $1 billion spending budget on original content in 2017, The Wall Street Journal reported.
AT&T's HBO Max, which will cost $14.99 a month and be free for current HBO customers, will launch next May. The service is essentially a supersize version of HBO. Besides HBO programs, it will have hit shows and movies from the Warner Bros. library as well as new content including shows from prolific TV producer Greg Berlanti and actress-producer Mindy Kaling.
Comcast, like its cable-industry peers, has been losing pay-TV subscribers as consumers cut the cord and opt for streaming services. Comcast has already lost 583,000 pay-TV customers since the beginning of 2019, while it lost 370,000 cable subscribers in 2018. Mr. Cavanagh on Monday likened Comcast's investment in Peacock to its Xfinity Mobile business launched about two years ago. Xfinity Mobile has added customers each quarter, reaching roughly 1.8 million lines in the third quarter of 2019.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
December 09, 2019 16:21 ET (21:21 GMT)
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