Deeper Dive—Peacock paid subscribers are still extremely low

Peacock’s shockingly low number of paid subscribers is just one of a handful of big takeaways from MoffettNathanson’s new study on effective RPUs for streaming services.

The media analyst firm partnered with Antenna, a direct-to-consumer data and analytics company, to assemble a compelling took at how eight major SVODs—Netflix, HBO Max, Hulu, Showtime, Paramount+, Disney+, Discovery+ and Peacock—stack up in terms of paid domestic subscribers and revenue per user.

“Big picture, the platform services that can rely on their own direct-to-consumer marketing for the bulk of their customers have the greatest ability to generate a ratio of higher ‘effective-to-rate card’ RPU,” wrote Michael Nathanson in a research note.

Indeed, Netflix and Hulu have both been able to keep their domestic RPUs high—$14.88 and $10.87, respectively—by obtaining and retaining the bulk of their customers through direct relations. MoffettNathanson estimated that the top eight U.S. SVODs have approximately 195 million combined domestic subscribers and that about 137 million are direct relationships. Netflix and Hulu combine for a little over 100 million of those direct relationships combined.

Beyond the impressive dominance by two streaming pioneers, here are some other key takeaways from the new report.

Peacock’s paid subscribers

Peacock, NBCUniversal’s ad-supported streaming service, has been on the national market for nearly one year now and if MoffettNathanson’s report is accurate, the service found a shockingly small amount of paid subscribers during that time.

The analyst firm estimated that Peacock has just 3 million paid domestic subscribers (as of March 31, 2021) and over one-third of them come in from Apple and Roku, which could be taking around 20% thanks to revenue sharing agreements. Peacock’s RPU comes in at $7.05—higher than Discovery+ and Disney+, according to MoffettNathanson’s estimates—but it doesn’t all that much when you have fewer than half the domestic paid subscribers as your next nearest competitor.

Comcast has been cagey about providing figures for Peacock beyond the slightly ambiguous sign-ups, which totaled 42 million as of April. NBCUniversal CEO Jeff Shell got a little more granular and said Peacock’s sign-ups are broken down into monthly active accounts (MAA), which NBCU defines as households that pay subscription fees or people who use the service monthly. He said that roughly one-third of Peacock’s sign-ups are MAAs, meaning that about 14 million accounts are either using Peacock regularly or paying for it.

Peacock has the Olympics coming up and Comcast is continuing to push more high-profile content to the service to help it catch up. But for now, it looks like a big majority of Peacock’s most dedicated users still aren’t willing to pay for it.

Apple’s subscriber share

Apple TV+ didn’t make MoffettNathanson’s list of U.S. SVODs and that’s likely due to extensive free trials leaving the service still without much RPU to talk about.

However, Apple stood out in the report thanks to its streaming platform reach; the firm estimates that Apple sources 8% of all domestic SVOD subscribers. That figure matches Amazon’s 8% and far exceeds Roku’s 3%. But Apple managed to source subscribers for all the services on the list while both Amazon and Roku haven’t been able to sell Hulu or Netflix.

If Apple is getting 20% through revenue sharing agreements with all the services, that means it’s still pulling in a good amount of streaming money even if Apple TV+ is a significant contributor yet.

HBO Max’s direct relationships

Netflix, Hulu and Disney+ have all done well at building and holding onto direct customer relationships, according to MoffettNathanson’s research. Peacock, though its paid customer base is still small, has also maintained a healthy mix of direct customers versus subscribers from third-party platforms.

HBO Max, Discovery+, Paramount+ and Showtime haven’t done nearly as well in that category and it could end up hurting them in the long run. This is especially true for HBO Max, which MoffettNathanson estimates has 20.7 million domestic paid SVOD subscribers, of which only 3.65 million are direct relationships.

“Given that there is a cost of distribution (we assume 20%) affiliated with third-party aggregators, there are material distribution costs in the P&L that will drive down the long-term profitability of platforms that are unable to build direct relationships with their customers,” wrote Nathanson. “In this case, the direct to consumer engagement at Discovery+, HBO Max (if [AT&T] ever decides to end their promotional support), Paramount+ and Showtime could be a longer-term issue.”