Comcast (CMCSA -0.12%) finally took the wraps off its forthcoming Peacock streaming service. During its two-hour presentation on Thursday, Comcast and NBCUniversal management stressed the importance of Peacock to the company's future.

The cable giant will invest $2 billion in the streaming service over the next two years as it tries to take on new competitors like Disney (DIS 0.33%) and AT&T (T 0.29%) as well as old cord-cutting instigators like Netflix (NFLX 2.72%).

And Comcast is offering consumers an extremely competitive price point: free (with ads).

Well, it's not exactly free. 

Peacock logo.

Image source: Comcast.

If you want access to the best Peacock has to offer, you'll have to subscribe to Peacock Premium (which still has advertisements), which will either cost $5 per month or require a subscription to Comcast's video or broadband service. Comcast also has a partnership with Cox to offer Peacock Premium free to its pay-TV subscribers, and it's working on deals with other distributors. An ad-free Premium version will be offered for $9.99 a month.

Despite Comcast's management touting how much consumer demand there is for free ad-supported streaming, it has fairly modest expectations for Peacock.

Half the viewers of its competitors

The first number to consider in Comcast's outlook for Peacock is total active accounts. Management expects to reach just 30 million to 35 million U.S. viewers by 2024.

Disney+ and HBO Max have much bigger expectations for their streaming services.

Disney expects to reach 60 million to 90 million total subscribers by 2024. That said, it anticipated just one-third of those subscribers would come from the U.S. On the other hand, Disney appears to have severely underestimated demand for the service. Moreover, Disney's Hulu, which still contains a lot of the content that will soon be on Peacock, ended fiscal 2019 with 29 million subscribers after moving to a subscription-only model in 2016.

Meanwhile, AT&T expects HBO Max to reach 50 million domestic subscribers by 2024. It thinks it can add another 25 million to 40 million subscribers in the rest of the world. HBO Max enters the market at the high end with a price of $15 per month, but AT&T plans to add a less expensive ad-supported version of the service next year to help boost subscriber count.

AT&T is sure to get a head start. The 10 million customers that already pay for standard HBO through one of AT&T's services will get their account upgraded to HBO Max in May. It's working with other distributors to get the other 24 million HBO subscribers the same deal.

That's a comparable strategy to Comcast's, which says 24 million consumers will have free access to Peacock Premium at launch through their cable provider (Comcast or Cox). Management said it's actively working with other pay-TV providers to offer Peacock Premium for free. Management seems intent to offer the service free to distributors, but it could be using it as leverage in negotiations for affiliate fees on its cable networks. AT&T, likewise, appears to be using HBO Max to increase the price of HBO for distributors without increasing the price for consumers.

Still, Comcast is starting with 24 million potential subscribers, and it expects to add just six million to 11 million over the next five years.

Half the ad revenue, too

Another number that stood out from Comcast's presentation is its expected revenue per user. By 2024, it expects the average viewer to generate between $6 and $7 per month. That number implies that management expects practically all of its viewers to get the service for free.

But that relatively low ad revenue also suggests relatively low engagement. Management pointed out analysts estimate Hulu generates around $10 per month per subscriber in ad revenue. There's reason to expect that number to climb even higher over the next few years. And while Peacock will have a lower ad load compared to Hulu, it's not cutting Hulu's ad load in half. 

So, Comcast's either expecting lower average ad prices, lower engagement, or both. If it's the former, Comcast wouldn't have put such an emphasis on the advertising aspect of Peacock. Instead, it seems management expects Peacock to be a secondary service used sparingly by relatively few video-on-demand streamers. The financial outlook doesn't line up with what management is saying about consumer demand for ad-supported streaming.

Intentionally handicapping itself

Peacock is a way for Comcast to test the streaming waters. It still has deals in place with other distributors, including Netflix, HBO, Hulu, and FX (also owned by Disney) -- four companies it's going to compete against in just a few months. And management said it'll explore taking back more of its content rights over time, particularly if it deems Peacock a success.

But Comcast is certainly being cautious to protect its legacy pay-TV businesses. Both its distribution and cable network businesses are threatened by the growth of streaming. Offering Peacock as an incentive to keep the big cable bundle -- where Comcast still makes most of its money -- forces management to balance the quality of the content and limit access.

But if Disney+, Hulu, HBO Max, Netflix, and dozens of other smaller competitors see substantial growth over the next five years (as those companies expect), Peacock might not be enough to prevent further cord-cutting.