NBCU’s Peacock Reaches New Heights (And Customers) With Roku Deal

Author

Michael Beach
September 24, 2020

Big news: Peacock is coming to Roku!

Why this matters #1: Roku has 100M+ users (43M HH) in the U.S., which accounts for 44% of CTV viewing time.  This deal should accelerate adoption for Peacock and provide Roku with additional advertising revenue.

Roku users (YoY growth) in the U.S. according to eMarketer:
1) 2010 – 4M
2) 2011 – 6M (↑ 46%)
3) 2012 – 8M (↑ 33%)
4) 2013 – 10M (↑ 20%)
5) 2014 – 15M (↑ 51%)
6) 2015 – 22M (↑ 49%)
7) 2016 – 33M (↑ 47%)
8) 2017 – 47M (↑ 45%)
9) 2018 – 63M (↑ 33%)
10) 2019 – 79M (↑ 26%)
11) 2020P – 100M (↑ 26%)
12) 2021P – 110M (↑ 9%)
13) 2022P – 117M (↑ 6%)
14) 2023P – 120M (↑ 3%)
15) 2024P – 123M (↑ 2%)

Why this matters #2: Things started to get messy with Comcast threatening to pull 46 NBCUniversal apps from Roku’s platform.

NBCUniversal apps on Roku, according to Variety:
1) Telemundo – 23
2) NBC Local – 12
3) NBC network – 11

As a part of the deal, some NBCUniversal content is heading to the Roku Channel.

Peacock sign-ups (% change) according to Comcast:
1) JUL-20 – 10M
2) SEP-20 – 15M (↑ 50%)

Big question: How is the advertising inventory split between Roku and Peacock?

Quick answer: Unknown.

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)
4) CPM $ – ≈ $305) $/spot – $0.03
6) Spots/month – 173
7) The service hits revenue target at 17 hours/viewer/month

Our take: Advertising currently accounts for ≈ 70% of Roku’s revenue, and we project it will be 80% for Peacock.  The difference between a 15% inventory share and 30% is massive.

Projected hours/user/month for ad revenue goal (% increase) for Peacock:
1) 0% advertising split – 17
2) 15% advertising split – 20 (↑ 18%)
3) 30% advertising split – 25 (↑ 25%)

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