Comcast took the wraps off Peacock, its new streaming service, on Thursday afternoon. And while Wall Street analysts were encouraged by the business model, they expressed concern about the initial investment and how competitive Peacock's content would be, and have largely not updated their company estimates.
Peacock will launch on April 15 for Comcast subscribers, while on July 15, the service will roll out nationally for anyone to sign up. The basic service is free, with 5 minutes per hour of advertising, which the company has already lined up sponsors for. There will be 7,500 hours of programming for the basic service.
Peacock premium, which will also be free for bundled Comcast customers and cost $4.99 per month for others, offers 15,000 hours of content with additional advertising. And an ad-free version of Peacock Premium will cost $9.99 per month.
Leveraging its existing television content and some new original content with the likes of Kevin Hart and other stars, Comcast expects to initially monetize 24 million subscribers at $6 to $7 per month. The company is targeting 30 million subs by 2024 and for the service to be profitable by 2025.
Here's what analysts think so far:
Morgan Stanley, Overweight, $53 Price Target
"This strategy of launching a streaming version of a broadcast network, backed by NBC's intellectual property, gives Comcast a unique opportunity to build a profitable over-the-top service. The implications of free: Tapping into the ratings/advertiser supply/demand imbalance in linear TV, Peacock has the potential to deliver premium video advertising inventory (and its typical premium cost-per-impression) to advertisers scrambling for engaged audiences."
- Benjamin Swinburne
KeyBanc Capital Markets, Overweight, $50 Price Target
"We came away neutral overall on the service and with a better understanding of NBCU's monetization strategy, though we believe content investments are going to be necessary for the product to be successful. The Company expects to have 30 million-35 million active accounts by the end of 2024, generating $6-$7 per month average revenue per user, and $2.5 billion in revenue. These targets are realistic given CMCSA alone has 19 million bundled customers, can leverage its existing linear TV advertising relationships, and can work in additional distribution partners during the next round of content renewals in 2020/2021. The challenge for Peacock will be the same challenge for every streaming provider: creating compelling content that demands attention. We view Peacock's content lineup as having a bit of everything, but it doesn't appear to do anything particularly well. "Lowering estimates; maintaining Overweight rating. In 2020 and 2021, we expect CMCSA to lose $2 billion in EBITDA."
- Brandon Nispel
JPMorgan, Overweight, $51 Price Target
"We were impressed with NBC's Peacock Investor presentation on Thursday – particularly content strategy, advertising monetization, rollout strategy, and longterm MAU/revenue forecasts. The biggest issue we heard from investors after, of course, is why such an attractive product has such low revenue expectations and we believe the company was conservative on the long term value, though it will take a while to ramp."
Credit Suisse, Outperform, $55 Price Target
"We found the user experience impressive, and the business model differentiated relative to other streaming services. Management’s guidance for $2 billion of losses over 2020/21 is well below HBO Max and Disney+, but reasonable, in our view, relative to less exclusive and original content than those services. It is too early to gauge how quickly and successfully NBCU will be able to change consumer habits and build the necessary engagement. Open questions are: what the exact differences between premium and free will be; cash investment costs; what distribution the service will garner; engagement necessary to hit guidance (roughly 30 minutes/day at double broadcast ad cost-per-impressions?); and the ultimate impact on the pay TV bundle."