Peacock Streaming Service Faces Subscriber Drop Amid Price Hikes

In a recent report, Comcast‘s streaming service, Peacock, has revealed a decline in its paid subscribers, shedding 500,000 customers in the second quarter of 2024. The numbers fell from 33.5 million to 33 million, raising questions about the platform’s growth amid ongoing price adjustments.

This drop was unveiled as part of a financial report from Comcast, which is the parent company of NBCUniversal and one of the leading names in the media industry. The setback has been attributed to fresh price hikes at Peacock and came just days before NBCUniversal prepares for a significant content rollout for the upcoming Paris Olympics.

Earlier this year, during their Q1 earnings call, Comcast had reported figures close to 33.5 million subscribers. Company representatives later confirmed these numbers were slightly rounded up to represent the figure accurately. This dip, while alarming, comes after Peacock recorded an impressive increase in year-over-year revenue.

Comcast disclosed a $348 million loss for Peacock during the April-June quarter, a significant reduction compared to the $651 million loss reported in the same period last year. Despite the subscriber drop, revenue for the streamer rose by an impressive 28% year-over-year, hitting the $1 billion mark.

Starting mid-July, viewers will see a price increase for Peacock Premium, which includes ads. The monthly fee will rise by $2 to $7.99, while the ad-light Premium Plus will also see a $2 hike to $13.99. Moreover, the annual pricing structure will also shift, with Peacock Premium’s price moving from $59.99 to $79.99, and the Premium Plus plan jumping from $119.99 to $139.99.

The new pricing guidelines are set to take effect for new customers on July 18, leading right into the July 26 opening ceremony of the summer games in Paris. Existing users will notice the increase on their next billing date after August 17.

In its recent unveiling of quarterly results, Comcast noted a 7.5% decline in net income, amounting to approximately $3.93 billion, or $1 per share. This is in contrast to the previous year’s figures of $4.25 billion, which translated to $1.02 per share. The company also reported a slight drop in adjusted EBITDA of about 1%, settling at $10.17 billion.

Comcast CEO Brian Roberts explained in his shareholder letter that the media segment has finally returned to adjusted earnings growth due in large part to Peacock, noting that this quarter marked the best year-over-year improvement since its inception in 2020.

After analyzing streaming profits, which remain precarious for most industry giants, Peacock has previously reported a full-year loss of $2.75 billion for 2023. However, Jason Armstrong, Comcast’s CFO, stated that “2023 marked the peak in annual losses at Peacock,” indicating an optimistic outlook for 2024 with expected reductions in losses.

During a conference call, Comcast president Mike Cavanagh chatted with analysts about when Peacock might reach profitability but did so without providing a specific timeline. He remarked that the company does not view Peacock purely on its own; rather, it is seen as an integral part of Comcast’s broader portfolio.

As streaming services continue to flourish alongside traditional media, Cavanagh emphasized that Peacock is evolving alongside Comcast’s legacy assets, indicating a strategy that aims to integrate these platforms for sustained growth. “This is a year where we see the growth in Peacock offsetting the decline in some of our linear businesses, and that’s basically a trend I would expect to see carry forward,” he said.

Recently, Peacock announced a price change to its subscription plans effective July 18 for new customers and August 17 for existing ones. This timing strategically aligns with the upcoming Paris Olympics.

In the earnings report, Comcast also shared insights into various segments within NBCUniversal. It highlighted how Peacock’s losses are categorized within the media unit. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) varied substantially across NBCUniversal’s different segments.

Brian Roberts dismissed rumors of highly-priced mergers and acquisitions, focusing instead on organic growth opportunities. He noted significant interest in the NBA, one of the most coveted sports franchises globally, which the company believes will drive substantial future growth.

Cavanagh disclosed an 11-year television rights agreement with the NBA, which includes exclusive games available on Peacock, aiming to attract new subscribers while retaining current ones. “The long-term goal for Peacock is to have a service that is a balance of sports, entertainment, and news,” noted Cavanagh.

Roberts reiterated that the exclusivity of the NBA deal and other high-value sports content will enhance both NBCUniversal’s and Peacock’s stand against industry shifts, stating, “There’ll be a lot of content on NBC, but way more content on Peacock.”

On another note, Comcast’s core cable and telecom services reported subscriber losses yet again in the second quarter, with smaller declines than in previous years. The company lost 120,000 broadband subscribers, which is an increase from a 19,000 loss during the same period last year. However, video subscriptions saw a decrease from 543,000 to 419,000.

Comcast Cable CEO Dave Watson commented that the company is focusing on combining video and broadband offerings to mitigate subscriber losses in 2024 compared to 2023. “At the end of the day, we’re focusing on value, combining linear and streaming considerations on a case-by-case basis,” he noted.

Revenue for the media unit climbed 2.1% in the second quarter to $6.3 billion, primarily attributed to improvements in domestic distribution and network revenues. Although advertising revenue dipped slightly, Peacock’s revenues contributed positively to the overall income.

For the studios segment, however, performance showed a sharp decline with revenue dipping 27% to $2.3 billion, heavily influenced by lower theatrical and content licensing revenues, which fell 74.1% and 5.9%, respectively. This was largely due to a comparison against much stronger revenue figures from the previous fiscal year’s major releases.

Moreover, adjusted EBITDA for the studios segment dropped 51.4% to $124 million, reflecting lower revenues that outweighed reduced operating costs associated with productions.

Finally, revenue from Comcast’s theme parks also saw a 10.6% decline, falling just below $2 billion. Despite the setbacks in attendance and revenue, Cavanagh emphasized the long-term potential for growth in the parks division, stating, “While the parks results are below our original expectations for the year, we still view parks as a terrific long-term growth business for us.”

As investors processed Comcast’s latest financial data, shares dropped by $1.01, equating to a 2.5% loss, landing at $38.52 during pre-market trading.