When NBCUniversal splits from Comcast next year, Media Group Chairman Matt Strauss says the independent company will be able to make decisions faster and have more flexibility with its partnerships. But he emphasized that the studio’s overarching strategy won’t change.
“I wouldn’t say that the independence changes how we’re looking at media. I think it just gives us more flexibility to move quicker,” Strauss told an investor conference hosted by Bank of America on Thursday. “We’re not trying to build a broadcast business sitting next to a streaming business. We’re trying to build a digital-first new media company where we’re trying to get the maximum return for our investment across the portfolio.”
After posting its first ever quarterly profit in the second quarter, Strauss said that Peacock will continue to prioritize engagement and growing its average revenue per user, revenue and margins faster than its costs. The streaming service currently has a total of 48 million subscribers, with 80% of its base on the ad tier.
While Comcast executives expect Peacock’s profits to continue growing on a year-over-year basis, they previously warned that it would vary from quarter to quarter.
“We said from the beginning this is not a sprint. It’s a marathon at a sprinter’s pace. If you look at the decisions we made in 2020, we have been incredibly consistent where others, I think, have evolved their strategy, arguably closer to what we’ve been doing,” Strauss said. “We feel very well positioned for continued growth, especially given the fact that we’re going to be independent and we’re now managing much more aligned as a portfolio.”
Looking ahead, Strauss said that the focus for Peacock is to “super serve” its fandoms, reimagine the streaming experience and provide subscribers with additional benefits to boost loyalty and retention.
He noted that 30% of “Love Island USA” engagement came from mobile devices, prompting NBCUniversal to expand its presence in vertical video. Peacock also has seen a major engagement boost through sports, with around 40% of “Love Island” viewers also watching the World Cup and three quarters of NBA viewers watching entertainment content.
Additionally, Bravo fans consumer an average of 75 episodes per month and have 33% lower churn than the average subscriber. Looking ahead, Strauss also expects to drive engagement and expand NBCU and Peacock’s portfolio of franchises and IP through its partnership with “Yellowstone” creator Taylor Sheridan in 2029.
In addition to expanding the service’s content offering, Peacock is testing a rewards program for select subscribers benefits like shopping discounts and a complimentary one-year subscription to Instacart. Additional rewards expected to be added over time include Universal Parks perks and experiences, NBCUniversal content previews and early access to NBCUniversal live events.
“The more value we can provide into the subscription, in addition to video, I think the more opportunity we’re going to have for continue to also improve retention and drive down churn and loyalty overall,” Strauss said.
NBCU also struck a new distribution deal with YouTube, which Strauss called a “win-win” that would allow it to grow both engagement and subscribers with millions of viewers who are familiar with its content through clips but aren’t Peacock customers.
“What we’ve done with YouTube is an example of the type of deals that we would like to do with others as we’re looking at continued growth and opportunities into the future,” Strauss added. “It allows us to build off of what we’ve done in a material way, but it also allows us to continue to evaluate and look for additional partnerships in the future as well.”
He also said that Peacock still has room to increase price, but that NBCUniversal would remain mindful of the macroeconomic environment and be “surgical around giving consumers choice” through its website, app, bundles and pay TV.
In addition to discussing Peacock’s strategy moving forward, Strauss also touted the benefit of Sky’s inclusion in the independent NBCUniversal’s portfolio, which he said would give the company more optionality as it looks to expand its reach globally.
“They have a strong brand, they have deep customer relationships, they’ve got local expertise, they’ve got production expertise in sports and news. There’s a lot of similarities with NBCUniversal and the media group and what Sky is doing that I think is just going to allow us to be more opportunistic,” Strauss said. “We’re really well positioned to continue to leverage the playbook that we have in the market. If we believe licensing is going to give us a better return, we’re going to lean into licensing on a market by market basis. If we think there’s opportunity to build streaming, then we’re going to lean into doing that. And if we see opportunities for partnership or acquisition, like Sky is doing with ITV, then we’re going to lean into that.”
NBCUniversal’s separation from Comcast remains on track to be completed by the middle of next year.
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