Peacock is launching w/ three pricing tiers according to Variety:
1) Free – Ad-supported w/ limited programming 2) Premium ($5) – Ad-supported w/ access to a larger content library 3) Premium + Ad-Free ($10) – Full access to programming (600 movies + 400 TV series)
Peacock launch details according to Axios:
1) Xfinity customers –April 15th 2) National launch –July 15th
Ad minutes per hour, according to NBCUniversal:
1) Linear TV – 16-20
2) Digital video – 8
3) Peacock – 5
Quick math on the advertising model for Peacock:
1) Ad minutes/hour – 5
2) 30s spots/hour – 10 3) Ad revenue/user/month – ≈ $5.20 (see below) 3) CPM $ – ≈$30 4) $/spot – $0.03 5) Spots/month – 173 6) The service hits the revenue target at17 hours/viewer/month
Quote from Linda Yaccarino – Chairman of Advertising & Partnerships @ NBCUniversal: “With Peacock, we’re giving consumers the free service they want and advertisers the reach and scale they desperately need—this is the best thing to happen to everyone’s screens in a long time…Peacock marks a doubling-down on the ad-supported ecosystem, and the next phase of NBCUniversal’s One Platform offering.”
Key details for Quibi revenue model: 1) $5/month w/ ads; $8/month without ads 2)1 pre-roll ad per episode (<5m video = 10s ad; 5-10m video = 15s ad) 3) 2.5m of advertising per hour 4) 20M subscribers by 2024 5) 75%of users will have ad-supported tier 6) They are seeking $15-25M upfront advertising commitments from companies such as P&G 7)$150M+ in upfront ad commitments
Quick math on Quibi advertising: 1) 20m paid users by 2024 2)50% w/ ads 3)15m paid users w/ ads 4)2.5m of advertising per hour 5)$35 CPM for 15s ad 6)10 15s spots/hour 7)$0.40 in ad revenue/hour 8) $665M revenue from advertising 9) $44.33/user/year in ad revenue 10) $3.69/user/month in ad revenue 11) 127 hours/year of viewing w/ ads/user 12) 11 hours/month of viewing w/ ads/user
Key details for Quibi content:
1) 7-10m per episode 2) 7K pieces of content at launch 3) 25+ episodes added daily 4) $100K/minute average development cost w/ a maximum of $6M/hour
What happens next: TV Buyers are being rebranded as video investment teams, and digital buyers are going to school on TV metrics.
The future: The term “digital buyer” and “TV buyer” will go away, and there will just be “video buyers.” Everyone cannot be great at everything, so some buyers will be stronger in TV or digital, but the future is cross screen.
Who wins: The winners will be whichever side learns the other side’s piece first and integrates it into a holistic video offering.
Comparison of annual deal size between Netflix and Warner: 1) Netflix deal #1 (2014–18) – $30M 2) Netflix deal #2 (2019) – $80M 3) HBO Max deal #1 (2020-24) – $85M
Quick math #1 for Friends and HBO Max: 1) Domestic subscriber target – 75M 2) The annual cost to license Friends – $85M 3) HBO Max would be paying $0.09 per month for each domestic subscriber to license the show.
Quick math #2 for Friends and HBO Max: 1) The annual cost to license Friends – $85M 2) # of seasons – 10 3) # of episodes – 236 4) $/season to license – $8.5M 5) $/episode to license – $360K
1) CTV will be the battleground for control of video advertising dollars – TV buyers are rebranding themselves as video investment teams, and digital buyers believe that CTV should fall under them. Control of the video ad budget is up for grabs, which will be key when linear TV falls below 50% of video spend in the next 4-6 years.
2) Political will set the pace for cross screen video advertising – The 2020 political video ad market will be $5.8B accounting for ≈ 4-5% of the entire U.S. market. Politics has consistently led the way with regards to audience targeting, and we believe that cross screen planning/buying will be added to the mix in 2020.
3) Ad-supported streaming will emerge as a sustainable business model – The success of platforms such as Tubi, Pluto TV, and the Roku Channel will continue in 2020 along with new entrants such as NBCUniversal’s Peacock. These platforms are popular with advertisers because they combine the reach/quality of linear TV with the targeting/measurement of digital. Ad-supported streaming will carry a lower ad load compared to linear TV, which will lead to an overall drop in TV ad impressions.