Comcast Expects to Spend $2 Billion Over Two Years on Peacock
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
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
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
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
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
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)
Copyright (c) 2019 Dow Jones & Company, Inc.
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