Comcast loses 561K cable subs, Peacock grows to 15M

Comcast’s cable TV subscriber losses accelerated for the third quarter in a row in 2022, with the operator shedding 561,000 in Q3 across business and residential customers, while streaming service Peacock saw growth.

Residential video subscribers declined by 540,000 in the period – more than the 484,000 and 497,000 it lost in Q1 and Q2, respectively. It's also significantly more than the 382,000 net residential video subs Comcast lost in the third quarter of 2021. Its residential video customer base now stands at about 15.97 million.

The continued loss of subscribers contributed to a 4.4% year over year video revenue decline to $5.25 billion, partially offset by growth in ARPU as Comcast implemented rate increases in the beginning of the year.  Still, growth in broadband, as well as business services, wireless, and advertising revenue helped grow total cable business revenues by 2.6% to $16.5 billion in Q3.

As traditional cable continued to decline, NBCUniversal’s Peacock streaming service marked growth in the quarter and now counts more than 15 million paid subscribers (as previously disclosed, adding about 2 million from the prior quarter) and around 30 million active accounts (from about 14 million additional bundled and free users).

In Q3 Peacock revenue more than doubled year over year to $506 million. It reported a $604 million EBITDA loss and Comcast executives said they still expect a $2.4 billion EBITDA loss from Peacock for the full year 2022.  

Long-term aspirations for Peacock

Traditional cable losses and growth at Peacock come against the backdrop of changing video consumption habits with viewers increasingly moving to streaming – something that Comcast Cable CEO Dave Watson expects to keep up, with eyes on evolving a platform opportunity for video.

“I anticipate the changing nature of video to continue,” Watson said on the company’s third-quarter earnings call Thursday. “We’ve anticipated it, we’ve looked at this, we’ve been able to manage through it and to focus on multiple growth drivers for us” in terms of broadband, business services and others on the cable side of the business.

However, he said they’ve also looked at video as a broad platform opportunity as Comcast has been able to offset a substantial part of pressure on the more mature traditional tiers of video through its Flex platform.  He also pointed to investment in XClass smart TV efforts, as well as a previously announced joint venture with Charter.

“So we view video as an opportunity long-term as a platform, so we will continue to focus on that,” Watson said. “And I think that will balance both things.”

Jeff Shell, CEO of NBCUniversal, suggested that the company’s streaming strategy is different than other peers in the space as it’s viewed as a part of the business (as opposed to say the likes of premium SVODs Netflix or Disney+), meaning management and decisions on programming and ad sales are done as one across the business. The long-term aspiration for Peacock is for the platform to balance out its overall media business, he noted.

“As viewership shifts from linear to Peacock, we want Peacock to get to a level and a scale that causes our business to be balanced as consumer sentiments and advertiser sentiments change,” Shell said.  

When it comes to content, Shell said that for NBCUniversal – which at its core is about producing content -  and to be successful it’s about maximizing returns and giving content the best chance of success no matter what the platform. That includes creating content for Netflix, Amazon or Apple, as well as Peacock.

“If you have a great content business the way you maximize your return is having platforms where you can have the flexibility to put your content on your own platforms and move it around,” he continued.

“We want to get Peacock to a scale to where we’re fairly indifferent between content going on linear and content going on Peacock and having the best platform out there,” he said. The second marker of success is profitability as the company is investing heavily in the streaming service.

“We view the fact that it’s going to get to a level of profitability that will generate a return on that investment that will add value to shareholders. And this quarter makes us more confident that we’re along that trajectory,” Shell said.

Need for more “buzzworthy” content?

Peacock this fall just started getting exclusive next-day content from NBC and Bravo that used to land on Hulu, and Watson said the platform is seeing nice uplift from next-day broadcast.  He also pointed to a strong slate of 2023 originals.

However at least one research firm thinks Peacock has work to do in terms of generating buzzworthy hits similar to the likes of Netflix’s “Stranger Things” or “House of the Dragon” on HBO Max.

Interpret Research’s VideoWatch data finds steady increases in Peacock’s Premium subscriber base – with a 133% increase year-over-year, based on survey results not limited to head of households.

“However, there are concerns about audience engagement. None of the Peacock Originals to date have been the type of buzz-generating megahits that other streamers have seen with their biggest titles,” Interpret wrote in a note Thursday.

It did call out the very popular series “Yellowstone” – which was a hit for cable, and while not a Peacock Original, streams exclusively on the platform.

“With Peacock’s subscriber base still far smaller than its competitors, in order for it to take the next step to becoming a major player in the streaming world, it’ll have to land blockbuster content that viewers can’t ignore – easier said than done in an ultra-competitive streaming environment,” wrote Interpret.

Still, Peacock’s growth to 15 million subscribers comes in just two years and it has had success in offering a variety of free, AVOD and premium SVOD tiers.

In Q3 data from Kantar’s Entertainment on Demand report showed that Peacock accounted for a 10% share of the new streaming subscribers in the period, behind only Amazon Prime Video and Paramount+.

Speaking to Fierce Video, Hannah Avery, client manager for Entertainment on Demand at Kantar said third quarter growth for Peacock signups were driven by paid AVOD and SVOD tiers as opposed to the platform’s free version – though the mix changes quarterly and isn’t consistently driven by the paid Peacock options.

“Peacock, even though it’s been kind of slow to launch, they put themselves in a really great position by offering so many price options for subscribers,” she noted. According to Kantar, behind FASTs, AVOD is the next fastest growing streaming tier and now reaches 28% of households. Major SVODs Disney+ and Netflix will soon jump into the lower-cost AVOD fray with ad-supported tiers debuting before the end of the year.

As for content on the platform, Avery said strength in the back catalog has been a help, particularly when Peacock first launched.

“Really loyal fans of some of these older titles really helped build the platform,” she noted, adding Peacock’s been putting greater focus on original titles.

Anecdotally over the last year she pointed to “Marriage Story” as generating buzz, and since then said original titles have been helping with growth.

“It’s kind of a mix of they have these loyal fans and then they’ve slowly been putting more money, more investment into these original titles to better compete” with the likes of an HBO Max, Avery commented. That could be key, as Kantar also sees a pool of streaming viewers that swap between platforms to follow content. They noted viewers following specific content drove new signups for both Paramount+ and Apple TV+ in Q3.

More Q3 earnings tidbits:

Revenue for NBCUniversal decreased 4.3% to $9.6 billion in the quarter, as it faced difficult comparison to the year ago period which included around $1.8 billion from the Tokyo Olympics. Adjusted EBITDA increased 24.6% to $1.7 billion.

Media revenues decreased 22.7% to $5.2 billion, due to lower advertising revenue and distribution revenue. NBCU ad sales dropped 35%, again citing a tough comparison to the year ago period that included the Olympics.

Total revenue for Comcast was down 1.5% to $29.8 billion, consolidated adjusted EBITDA increased 5.9% to $9.5 billion and free cashflow was $3.4 billion. The company recorded a net loss of $4.6 billion compared to a profit of $4 billion a year ago. On an adjusted basis net income rose 4.5% to $4.22 billion.