Comcast announced Friday the launch of Peacock, it’s free ad-supported content streaming service. The stock went up nicely, but when Disney launched its own streaming service, the stock ran up a lot more.
Before we compare, here are the essential details of Peacock:
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. An ad-free version of Peacock Premium will cost $9.99 per month.
Leveraging its existing 20 million cable subscribers, 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 subscribers by 2024 and for the service to be profitable by 2025.
Comcast shares rose 1.15% to $47.41 Friday.
Clearly, investors are optimistic. Analysts are largely positive on the particulars of the services, saying the free model (with only 5 minutes of advertising per hour), should help the service scale and gain subscribers. Initial investments will pressure profits in the beginning. Questions about the relatively low level of monetization bothered one analyst.
Comcast has been losing cable subscribers at a lower rate than the rest of the television industry because its Xfinity technology provides a premium service and experience compared to most of the industry. Its Cable revenue is expected to grow 5% year-over-year to $58 billion in 2019. Its high-speed internet revenue is expected to rise 9% to $18.7 billion in 2019.
The company also owns a chunk of Hulu and has acquired Sky TV, which it has streaming plans for. The relative gain for Comcast, while not small, doesn’t’t loom as large as it does for Disney.
Disney shares popped 8% after it announced the details of Disney+.
The company has seen fast adoption of its $4.99 per month service (bundle with ESPN Plus is $6.99). Disney, like Comcast, has a huge content backlog that it’s using to gain subs at a fast pace.
But Disney has been seriously losing on the television front in the past few years. Now, it’s adding a growth dimension to its portfolio of businesses.
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