Michael Greeson | Founder & Principal Analyst | June 13, 2023
Is Comcast’s Decision to Charge Xfinity Users to Watch Peacock the Right Move?
As with Netflix’s recent move to monetize illegitimate users, Comcast’s decision to charge Xfinity customers to access Peacock will likely convert a sizable portion of users to paid Peacock viewers.
Aluma research finds 38% of Xfinity users that currently watch ad-supported Peacock for free will convert to paid subscribers, more than three-fourths are leaning toward the $4.99-per-month ad-supported plan, while less than one-fourth (30%), less so the $9.99-per-month ad-free service (8%). One-fifth of Xfinity users were unsure about how they’d react.
As of April 2023, 37 million US households watched Peacock, 15 million of which did not pay for access, most all Xfinity customers. If 38% (5.6 million) convert to paying subscribers at their chosen tier, it would generate an additional $413 million in annual revenue, which is not insignificant given the financial losses Peacock continues to endure ($713 million in Q1.23).
However, if 39% of Xfinity Peacock households stop watching the streamer altogether, that’s a loss of 18 million ad-supported viewers (average of 2.4 adults per user household). Depending on CPMs, the loss of advertising revenue could exceed the $415 million gained in new subscription revenue. As well, the CPMs would likely decline because of the audience shrinking by 18 million viewers.
Early reports suggest Netflix has lost some subscribers due to clamping down on credential sharing, but it will turn out to be minor relative to the number of paid subscribers it will gain. (The ratio of sign-ups to cancelations since May 23 increased 25.6% compared with the previous 60-day period.) Unlike Netflix, however, Peacock will be losing primarily Xfinity viewers that pay nothing for the service but watch advertising. This complicates the process of determining whether revenues on balance increase or decline.
It will take several quarters before Comcast knows how this turns out, and no doubt longer before the public gets a transparent view of the matter. Be wary of early company reports focused exclusively on subscriber gains that pay no attention to consequent hits to ad revenues.