That marks a healthy 3 million increase from the 15 million it reported at the end of the third quarter.
“We’ve doubled our paid subscribers at Peacock since the beginning of the year,” Shell said.
Those figures also don’t include customers of parent Comcast that get Xfinity bundled with Peacock – which Shell said at some point will be converted to paid subscribers.
As a largely ad-based business, Shell noted that usage is just as important as the number of subscribers, a metric that’s outperforming the company’s own early expectations.
“We’re seeing usage of over 20 hours per month on those paid subscribers, which is well above what we forecasted three years ago when we launched the business,” he said.
And he said those subscribers and usage are turning into real dollars “not funny money” – seeing average revenue per user (ARPU) that’s approaching $10. That translates on a run rate basis of doing over $2 billion of revenue in two and a half years, “so very, very encouraged,” Shell continued.
Comes back to content
Shell also said that respective jumps into the AVOD world by SVOD leaders Disney+ and Netflix validates the business model Peacock implemented from the get-go (Peacock also has a completely ad-supported free tier as well). And while he believes NBCU picked the right strategy in pursuing premium, ad-supported video with a dual revenue stream, it all comes back to content and programming.
The World Cup has “been a big driver for Peacock,” according to Shell, with Peacock streaming Spanish-language coverage of the entire tournament, including the first 12 matches available on the services’ free tier and the remaining available on Peacock Premium.
“We've had the benefit on Telemundo of this strong performance, but then Peacock has been off the charts because people like the production and don't mind watching in Spanish,” he said. “And for a lot of people, it's the only streaming option they have to watch World Cup.”
Add to it NBCU’s next-day broadcast content from NBC and Bravo (with shows like “Saturday Night Live,” “The Real Housewives” franchise, which use to land on Hulu), as well as studio productions – with the chief executive saying the latter is not delivering simply a movie-to-movie driver for the platform.
“If somebody came there to watch ‘Nope’ and sees that we have another 12 movies on there,” he noted. “We have the best movie offering now in streaming and people will talk about it, movies drive platforms and our movie studio’s driving Peacock.”
Non-fiction programming also is seeing traction, with Shell pointing to a documentary on Casey Anthony “which is on fire right now” and become the top title people coming to watch the World Cup view second.
“We have this platform that has the ability to launch hits, whether it’s non-fiction or drama or comedy. So the content strategy, it’s early days, but I think it’s working and is resulting in the performance we’re seeing,” Shell noted.
However, analysts from Interpret Research have previously said that while Peacock is building up subscribers, there are concerns that its original series aren't the megahits other streamers have seen with the likes of Netflix's "Stranger Things" or HBO Max's "House of the Dragon."
"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 in late October.
Worsening ad market
When it comes to the advertising market, Shell acknowledged on Monday that it’s been worsening over the last six to nine months, and thinks it’s driven more by uncertainty than other factors.
“And I think it’s gotten even worse really in the last month or so…It’s actually hard to figure out whether that’s because of macro conditions, whether people’s businesses are worsening or rather because people are just uncertain.
“I tend to believe it’s more the uncertainty because it’s more cash than pricing. Pricing is still pretty good,” Shell continued.
For example, he said previously advertising cash would come in a month out, whereas now the timeline is condensed to a couple of days prior.
“And that would indicate to me that advertisers are kind of like the rest of us, trying to figure out where the economy is going and holding back, but it’s definitely getting worse,” he said.
According to Shell, the company will still be up mid-single-digits over a year prior in Q4, which he said is driven by several factors, including Peacock “which continues to do really well”, as well as election dollars, among others.
Scale and investments in data for alternative currencies have also helped insulate the company a bit “from weakness in the ad market because of the scale and quality of our ad sales group,” according to Shell.
Still Shell acknowledged that for its media business EBITDA in the fourth quarter “will be challenged a little bit more than we thought, given the cord cutting and given the advertising, ” while adding he isn’t that worried about advertising looking out into 2023.