Peacock, the streaming service owned by NBCUniversal -- itself a subsidiary of Comcast (CMCSA -0.52%) -- has at times been written off as an also-ran. Arriving as a soft launch in the spring of 2020, Peacock debuted a handful of months after the appearance of Walt Disney's Disney+, and just six weeks before Warner Bros. Discovery's HBO Max.
In the time since, Disney+ has garnered more than 152 million subscribers, while Warner Bros. Discovery has over 92 customers across HBO Max and Discovery+ (the company doesn't offer siloed numbers). Peacock has 30 million accounts, of which 15 million are premium memberships. Despite Peacock's relatively humble growth, there are signs it could soon be rustling feathers in the streaming space.
Cutting off Hulu helped return Peacock to growth
Peacock has experienced mixed growth this year. The streamer added 4 million paid customers in its fiscal first quarter, but could not increase that figure during its second quarter. However, Peacock has grown in the third quarter, bringing in an additional 2 million premium subscribers.
Speaking during a recent episode of CNBC's Squawk on the Street, NBCUniversal CEO Jeff Shell said the company's decision to end its relationship with Walt Disney-controlled Hulu is benefiting Peacock. For many years, NBCUniversal shows like Saturday Night Live and Chicago P.D. debuted on linear TV before transferring over to Hulu the day after. But starting last month, much of that programming has transitioned over to Peacock.
Shell also cited Comcast's decision to make Peacock the de facto home of Universal Pictures movies such as Minions and Jurassic World Dominion as key to growth. Additionally, the executive noted ongoing licensing arrangements with sports outfits such as the English Premier League and WWE are helping Peacock maintain its premium subscriber numbers.
Comcast is in line for a big Hulu payday
NBCUniversal's shift away from Hulu comes as Comcast inches closer to rescinding its minority stake in the streamer. In May 2019, Comcast agreed to sell its 33% stake in Hulu to Walt Disney for no less than $27.5 billion as early as January 2024. However, the companies agreed the ultimate price will be based on "fair market value" -- and determining that number could become a point of contention.
At the time of the Comcast-Walt Disney agreement, Hulu had 25.2 million subscribers. That figure grew exponentially as millions of people found themselves spending time at home during the worst months of the COVID-19 pandemic. Hulu now claims 46.2 million customers.
Hulu's growth was not missed by Comcast. Executives at the company reportedly decided its stake in the streaming service is now worth closer to $70 billion. Either way, whatever Walt Disney ultimately spends to gain full ownership of Hulu, it will almost certainly be more than $27.5 billion.
The time is right for Comcast to go all-in on Peacock
Comcast has committed to spending $3 billion on programming this year, increasing to $5 billion in 2023. There are also reports the company is looking to reapportion as much as $1 billion from its linear TV operations to streaming.
Of course, even with Comcast spending billions more on Peacock content, it's still in the shadow of its well-heeled rivals. Netflix plans to invest $17 billion on original programming in 2022 and in 2023, while Walt Disney has set aside approximately $32 billion this year alone -- much of which will wind its way to Disney+ and Hulu. Nonetheless, an influx of cash from Walt Disney in the-not-too-distant future could certainly provide Comcast a good excuse to up Peacock's content budget.
Despite Peacock's lackluster growth earlier this year, the 2 million new customers it added in Q3 is a sign Comcast is starting to understand what the streaming service is, and more importantly, what it could be. With a mix of sitcoms, reality shows, live sports, movies, and more, Peacock is perhaps the best catch-all streaming service around. And with cord-cutting continuing apace, Comcast's bet on Peacock looks like it's paying off.
