While neighboring giants AT&T and Dish Network reported slight slowdowns in pay TV losses for the first quarter, Comcast saw an acceleration as 491,000 subscribers cut the cord, compared to 409,000 a year ago. The operator’s year to date losses total 1.5 million, bringing its total video footprint crashing to 19.35 million.
Unfortunately for Comcast, Peacock’s performance couldn’t sugarcoat the sustained cable TV exodus, with the streaming service clocking up 42 million sign-ups one year after launch, while registering a loss of $277 million in Q1 2021, an alarming $218 million increase over the previous year period attributable to Peacock alone.
Peacock was primarily to blame for Comcast’s higher programming and production expenses in the quarter, due to new licensing agreements, although this was partially offset by lower amortization associated with theatrical releases in the current period.
Aware of the financials taking the shine off things, Comcast was keen to highlight figures such as Peacock users consuming 20% more programming hours each month than the traditional NBC audience. Thirst for content during the pandemic drove Peacock to over 1 billion hours watched, which enabled Comcast to create additional advertising inventory outside of its initial partnership, with CPMs (cost per thousand impressions) reportedly at a material premium in Q1 compared to linear primetime.
Key to Peacock’s domestic success has been Xfinity with X1 and Flex driving subscriber acquisitions and healthy engagement, while heavy losses came at the cost of securing original programming deals with the likes of the NFL and WWE, which it believes will provide a strong path to upsell Peacock premium.
An overseas expansion is also on the horizon. With Peacock gaining scale domestically, Comcast sees compelling ways to expand internationally, including looking to take advantage of the brand and scale of Sky across its European markets, to potentially strike partnerships with local programmers and distributors. More information on Peacock’s global expansion efforts will be shared throughout this year.
For a long time now, Comcast has praised Sky’s technological prowess, emigrating much of the technology stack over to the US, largely focusing on the revered AdSmart addressable advertising platform. Audience Studio, NBCU’s targeted ad technology, has been rolled into AdSmart, keeping the AdSmart name as an umbrella term for Comcast’s advertising technology. This has also been geared towards something called an AI-powered contextual media planning tool for TV, which involves slotting ads into relevant US content with the aim of bringing consumers an “organic viewing experience.” The original SkySmart ad technology was built around Cisco technologies.
Comcast now looks to be taking that relationship into another gear and in the opposite direction. With international expansion plans in such fledgling stages, details are minimal, but we see potential scope for a Peacock/Now crossover (Sky dropped the TV from its Now TV streaming business as part of a recent rebranding effort).
Speaking of Sky, the European business increased customer relationships by 221,000 in the first quarter to reach 56.9 million, making it the best first quarter result in six years for Sky, despite the lockdowns imposed throughout Europe. Ever since Sky was taken over by Comcast, operational results have never been broken out by service, although financials are still broken out, with Sky’s direct-to-consumer segment increasing 1.8% to over $4 billion, from total revenue of $5 billion.
Better still, after an intensely tough year for advertising, Sky’s advertising arm showed signs of strong recovery, with ad revenues growing 3.4% to $574 million in Q1.
Circling back to Comcast’s core domestic activities, the broadband business gained 461,000 subscribers in Q1 2021, almost on par with last year’s 477,000 sign-ups, bringing the total broadband base to 31 million.
Meanwhile, Charter Communications came out with worse than expected results after being the shining star in US pay TV through recent quarters – losing 138,000 net video subscribers in Q1.
Charter now sits on just over 16 million video subscribers, having emerged from 2020 unscathed after adding 19,000 net subscribers throughout the year as a whole. Charter boasted of triple play bundling as the recipe for success, although the latest results have set the scene for a difficult year for Charter and others – reflecting the delayed onset effects of the pandemic that Faultline has warned about tirelessly.