It's relatively good news for streaming services like Netflix (NASDAQ:NFLX), and even Amazon.com (NASDAQ:AMZN), which distributes digital video through Prime. But the biggest beneficiary of the paradigm shift spotted by digital video editing and production platform Grabyo is the soon-to-be-launched Peacock service from NBCUniversal -- a division of cable giant Comcast (NASDAQ:CMCSA). Simply put, Grabyo's recent survey of consumers indicates that 74% of television watchers will only be streaming their content by 2025.
On the surface, it's neither surprising nor alarming. Cable companies that have been on the wrong end of the cord-cutting craze are finally stepping up their streaming game. In addition to the impending launch of Peacock, ViacomCBS (NASDAQ: VIAC) revealed last month it was planning its own, similar ad-supported video platform. Fox Corporation just announced its acquisition of Tubi, which injects advertisements into television programming and movies to make them free for watchers.
Somehow, though, Comcast's Peacock still looks like it comes out the winner of this budding branch of the streaming video market.
Grabyo's survey confirms what most investors already innately know -- streaming is so well focused and affordable that it's negating the need for cable TV. The firm's data further indicated 36% of consumers looking to cut the cord rated affordability as one of the top three reasons to do so... a data point that may understate consumers frustration with high cable bills.
It's curious, however. While the poll found most consumers intend to use only streaming video services within five years, customers don't exactly hate their cable providers, or their prices. An impressive 33% of cable customers rate the value of their TV service as "very good," while 43% of them deem cable television a "good" value for the money. Streaming fares a little better, but not leaps and bounds so.
These numbers suggest what this year's expected slowdown in cord-cutting also imply. That is, we may be nearing a streaming/linear cable equilibrium where the remaining traditional cable TV customers have decided their monthly bill and their advertisement exposure is fair for what they're getting. It may also tacitly suggest there's a bit of ground in between those two extremes of the free/premium continuum that's been mostly overlooked by the industry... until now.
The concept itself is certainly proven. SpotX's 2020 Vision report published in December points out that a little more than 60% of streaming consumers already do watch ad-supported video. SpotX also indicated 40% of video content now being streamed is actually ad-supported.
Enter Peacock, built from the ground up to deliver cheap, network-caliber entertainment with a few ads, and backed by a sizable library of new and old content choices from a network and a major movie studio.
Nothing else like it... yet
With nothing more than a passing glance, Peacock could look just like another Netflix or Prime. That's not what it is though, by a long shot. Peacock is being built from the ground up to be a marketable hybrid of a Netflix-like service and network content one would expect to see on an NBC affiliate station. Live sports and regular prime-time programming will also be available via Peacock, with the commercials one would expect to see aired through a cable broadcast.
In other words, Peacock may not be linear cable, but it's certainly close enough that consumers will be hard-pressed to identify a meaningful difference.
Comcast won't operate by itself in this middle ground for very long, though. While details about its service are scant, ViacomCBS has made clear it's going to dig deep into its vaults to build on its existing CBS All Access platform. With properties like Nickelodeon, Comedy Central, BET, Smithsonian, and more primed to contribute as many as 30,000 TV episodes and up to 1,000 films to the cause, ViacomCBS has the potential to become a player. It's just so far behind Comcast on the planning front, however, that most consumers may have already become comfortable with Peacock before ViacomCBS even figures out what it is.
This is a speed-based race too. Grabyo's outlook may say 74% of television fans will be purely streaming by 2025, but that migration has already started. Peacock will be available closer to the beginning than the end of that shift, and it will be the first real ad-supported option of its caliber, giving it a chance to turn test-drivers into buyers before a competitor does.
It's Comcast's lead to blow
If anything, the advent of the coronavirus outbreak might only accelerate Grabyo's expectation.
TV-viewership measurement name Nielsen reports that when consumers have been stuck at home for prolonged stretches, television viewing time can jump as much as 60% above the norm. Although the COVID-19 contagion will eventually pass, consumers may still be nervous about getting out when Peacock officially launches in mid-July. Should a recession take hold, that too will keep people at home and looking for cheap entertainment.
Either way, Peacock wins, particularly if consumers have tired of what's on Netflix or Prime by that point in time.
ViacomCBS could conceivably have its ad-supported service up and running by around that time, but that would be rushed effort, and likely wouldn't have the well-planned advertising management platform in place that Comcast has built for Peacock.
In simplest terms, Peacock still looks poised to rule the roost, now more than ever. Comcast's platform will be an easy off ramp for hesitant cord cutters to take, and Grabyo agrees more and more that they are ready to make some sort of switch. The company's plans to amass at least 30 million subscribers by 2024 now don't seem so crazy after all. Indeed, they may be a bit modest.