Why Peacock Is Giving Fans a Taste of the NFL Without Commercials
Ad-free fourth quarters are part of strategy that emphasizes long-term growth over short-term cash
When Peacock streams its first exclusive NFL games, it will be leaving some money on the table—with a bigger picture in mind.
The NBCUniversal-owned streaming service will be commercial-free during the fourth quarter of both coming National Football League games—a regular season matchup Saturday between the Buffalo Bills and Los Angeles Chargers and a playoff battle Jan. 13 that Peacock paid around $110 million to carry.
The move seems counterintuitive, given that NFL games are a premium destination for advertisers and a cash machine for media companies. Peacock is expecting a lot of new viewers, however, and wants to give them a first-class experience that will persuade them to become paying subscribers.
“The bosses get it,” said Mark Marshall, chairman of NBCUniversal’s global advertising and partnerships unit, when asked how the brass at NBCUniversal and parent Comcast reacted to the idea of a game with about 40% fewer ads.
The move fits into a larger strategy at Peacock, whose roughly 28 million subscribers make it a relative minnow in the ocean of streamers. While rivals have buzzy original-entertainment, Peacock is relying more heavily on sports to draw in subscribers. It offers the NFL, Big Ten college sports, English Premier League Soccer, golf and the Tour de France.
The costs for those sports rights are piling up. But for now, Peacock’s main priority isn’t to make sports profitable in the streaming realm, but rather for sports to power growth and keep customers hooked.
“Sports is a differentiator to us. Once you’re in, you are exposed to everything else,” said NBC Sports President Rick Cordella, adding that sports can help keep subscribers from canceling. “Sports are sticky.”
The sports price tag could rise, because NBCUniversal might pursue National Basketball Association rights next year for both NBC and Peacock. “We will certainly take a look at it,” said Cordella, who took over as head of NBC Sports in October after holding roles at Peacock.
Rival streaming service Max will soon begin charging users extra for sports through an add-on tier, reflecting its view that passing on sports costs to consumers is essential if streaming is to become profitable. Cordella said Peacock has no plans for a sports surcharge. The company wants to use sports to promote sampling of entertainment, and a surcharge would discourage that while risking service cancellations, he said.
Peacock is expected to lose $2.8 billion this year. Subscriptions to the service are up 75% over last year, with sports content serving as an important driver. Comcast executives have said they expect the losses to decline starting next year.
While there will be no commercials in the fourth quarter of the coming NFL games, the Dec. 23 game’s ad-free quarter is being sponsored by Walmart, Hyundai and Capital One; those brands will be mentioned at the start of the quarter. Sponsors for the playoff game haven’t been disclosed.
Peacock expects to have more than 13,000 hours of sports content in 2024, including 4,000 hours of exclusive live sports. Few streamers have that kind of volume, though Disney’s ESPN+ said it has more than twice as many hours of sports content as Peacock.
“If you are Peacock, the only thing that is going to move the needle for you is sports,” said Patrick Crakes, a consultant and former Fox Sports senior executive. While Peacock has also invested heavily in original content, that can be hit-and-miss. “Developing TV shows is hard,” Crakes said.
On Comcast’s most recent earnings call in October, Chief Executive Brian Roberts said, “We have the most live sports of any of the streaming services. And I believe that that’s a surprise to many people when they learn that.”
Rich Greenfield, a media analyst at LightShed Partners, questioned the Peacock strategy in a report this week, writing, “Sports has become a very expensive form of Peacock subscriber acquisition cost.” Even worse, he added, “with sports as the focus, there is no ability to scale globally.”
NBCUniversal officials counter that people who watch sports on Peacock spend a majority of their time watching nonsports content, and they point to data from subscription-analytics firm Antenna that show Peacock has recently had a low cancellation rate.
Though Peacock is leaning on sports for its growth, other streaming services, including ESPN+ and Apple TV+, also serve up a lot of sports content. Amazon Prime Video carries Thursday night NFL games and is in talks to take a stake in regional sports network operator Diamond Sports, The Wall Street Journal reported earlier this week.
Warner Bros. Discovery’s Max is now carrying most of the sports that are also available on its cable networks TBS and TNT. Max is profitable in the U.S., as is ESPN+.
Paramount+ has some live sports, including simulcasts of NFL games airing on CBS, but doesn’t have Peacock’s breadth of sports content nor the expenses associated with it. Paramount has lost more than $1 billion this year but also has indicated losses are shrinking. The service has 63 million customers and has had greater success with original programming than Peacock, thanks to shows produced by Taylor Sheridan such as “1883,” “1923” and his latest, “Lawmen: Bass Reeves.”
Crakes said this Saturday’s game likely won’t provide a significant bump in subscribers. The playoff game in January might—although if those subscribers don’t stick around, the cost to acquire that game might be hard to justify.
Cordella said there could be some service cancellations after the playoff game, “but not to the point where the economics don’t work.”
Although the fourth quarter will be commercial-free, Peacock will include earlier in this week’s game a custom spot for Walmart that features football analysts Chris Simms and Devin McCourty and is aimed at last-minute holiday shoppers. Peacock also will stream a QR code taking viewers to Walmart’s online holiday hub, so they can shop while watching the game.
Isabella Simonetti contributed to this article.
Write to Joe Flint at Joe.Flint@wsj.com
Corrections & Amplifications
The ad-free fourth quarter for Peacock’s Dec. 23 NFL game is being sponsored by Walmart, Hyundai and Capital One. An earlier version of the article incorrectly said the three companies also would sponsor an add-free quarter for Peacock’s NFL playoff game. Also, Rick Cordella is president of NBC Sports. A previous version of this article incorrectly identified him as chairman of NBC Sports.(Corrected on Dec. 21)