NBCU’s freemium strategy may give Peacock edge against competitors
NBCUniversal is jumping into the streaming wars with its new service Peacock. The streaming service will have steep competition with established streaming services like Netflix, Hulu and the newer Disney+.
Unlike its main competition, NBCU has announced that Peacock will have a free, ad-supported tier available to all users along with paid premium subscription tiers, also known as a freemium model. While other streaming services such as Funimation and Crunchyroll use similar models, Peacock will be the only mainstream, broadly appealing service to adopt a version of the streaming model.
So, what makes Peacock’s model different?
Premium model
Subscription-based streaming services became popular with Netflix, as people wanted an alternative to the high cost of traditional television, and they wanted to avoid commercial breaks. Other companies have started to play catchup to Netflix as more streaming services are released emulating the same model as Netflix.
For as low as $5 to around $15, consumers can pay to have access to premium content such as full seasons of the latest shows and movies, and original content from the companies which own these streaming services.
Free streaming
There are also many free-to-use streaming services which are supported by ads such as Sony Crackle, Tubi TV and Amazon’s more recent IMDb TV. These services don’t offer the same amount of premium, original programming and the content they feature is often older. The free services also seem to be less popular than paid, premium subscriptions as shown by the now-defunct Yahoo View.
Free streaming has the benefit of being available to a wider, less exclusive audience but may turn off viewers who dislike ad breaks and the lack of premium content.
Freemium streaming
The combination of free and premium models is freemium. A few years after Hulu launched it utilized this method but discontinued the free option in 2016. Currently Funimation and Crunchyroll, two popular anime streaming platforms use this model. But does freemium work?
For Hulu, having a free option didn’t work, but not because free streaming doesn’t work. Hulu’s freemium model had aspects which consumers didn’t like, including not allowing free streaming on all devices and its subscription tiers went from free to $7.99 with ads and then $11.99 for no ads. A jump of $7.99 from free was perhaps too much to convert consumers.
Hulu also failed in another free streaming attempt with its partnership for Yahoo View. Like Hulu’s former free tier, Yahoo View’s free, ad-supported streaming was only available in web browsers and had no mobile or streaming player app, limiting viewers who may have been interested in the content.
Peacock’s free tier will reportedly have access to about half the content as premium tiers, but the streaming service will be available across all devices, with mobile apps and apps for devices like Roku. Peacock also has lower prices than Hulu previously did (and currently does). With a free tier, then $4.99 with ads (which is free to Xfinity customers) and then an additional $5 for no ads.
NBCU has a large library of content to offer through the service to attract viewers, and plans to produce and release other exclusive, original content. The streaming service will have a potential audience of around 31.5 million Comcast users who have access to the $4.99 ad-supported premium tier included with their subscription.
With an increased interest in free streaming, Peacock has potential to be a serious contender in the streaming wars.
Conclusion
Though some of Peacock’s announced slate of original content may not be able to be developed until after the COVID-19 pandemic, NBCU has a large library of classic and recent content to entice viewers.
With Peacock’s freemium model of streaming the service will be able to appeal to consumers who want to watch content for free and will offer a boost for Comcast subscribers and its low premium prices have the potential to convert free customers into paying ones to have full access to Peacock’s original and classic library.
Peacock’s model may be the best of both worlds to attract viewers.
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