Ahead of the launch of NBCUniversal’s Peacock streaming service launch in April, its parent company is reportedly in “advanced talks” to buy ad-supported streaming service Xumo.
The Wall Street Journal reported Thursday that Comcast—which is regularly voted the most hated company in the U.S.—is eyeing an acquisition of the service, which the paper notes the deal could offer support for the various services that fall under Comcast’s umbrella, including the forthcoming Peacock as well as Xfinity and Sky, the European pay-TV giant the company acquired in a massive $39 billion deal last year. The Journal noted that Xumo has been used by other companies to support their streaming services, adding that it additionally “repackages traditional TV content into new digital channels.”
At present, it’s unclear exactly what Peacock will look like at launch, though NBCUniversal said in September that the service would be both ad- and subscription-supported. Citing sources familiar with the matter, CNBC reported last month that NBCUniversal was considering allowing the service to be free to anyone through an ad-supported model. The company is set to reveal further details about the service on January 16 during an investor event.
Nearly every other anticipated service that’s launched this year—and there were so, so many—have been subscription-based (even if, as was the case with services from Apple and Disney, those entry-level subscription prices were relatively low). Hulu, for example, offers both ad-supported and ad-free versions of its service but charges subscription fees for both. There are, however, a few outliers that offer free ad-supported streaming, such as Pluto TV, which was acquired by Viacom this year for $340 million. Amazon also launched free ad-supported streaming through IMDb this year.
Analysts have speculated over whether Netflix may eventually have to turn to ads in order to grow, though the company has vehemently denied those rumors. Likening itself to HBO, the company said in a letter to investors in July that being ad-free “remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false.”
Peacock is in a unique position to offer its service through a free, ad-supported tier. On the one hand, NBC is a cable broadcaster whose viewers are used to seeing ads at length while watching their shows. Moreover, whatever your specific feelings about The Office or any other of the network’s legacy series, Peacock will launch with decades’ worth of shows and movies that people already know and love—which is more than can be said for competitors trying to play catch-up with hastily produced original content.
How viewers respond to whatever ad-supported model Peacock may or may not run with when it launches will likely depend on the quality and frequency of those disruptions. But should the service offer a premium ad-free tier as well, there’s still a good chance viewers will still seize on the ad-supported version. Hulu, for example, charges $6-per-month for its ad-supported plan (the ad-free version costs $12 per month), but the company said in May that 70 percent of its 82 million viewers are on the ad version. But Hulu, like Peacock, has a diverse catalog of content that clearly justifies the subscription cost for a large majority of users.
Whether the ad-supported model will work for retaining viewers, though, is a giant question mark at this point—whether or not media executives think otherwise.