Comcast, the parent company of media giant NBCUniversal, released some profit figures (or lack thereof) yesterday, revealing—in a totally casual, “No need to worry about this” way—that the company’s new streaming service, Peacock, lost $520 million in adjusted revenue over the last quarter.
Now, admittedly, that sounds bad. (Especially when you take into account the fact that this same period last year saw only a $233 million adjusted loss—practically pocket change!) But CEO Jeff Shell seemed very relaxed about numbers that would be catastrophic as applied to, say, a McDonald’s franchise, or a small island nation.
“Everything on Peacock is heading in the right direction, and there is really nothing from a trajectory perspective that is any different from what it was last quarter,” Shell said in the company’s quarterly earnings call this week, per THR. “All metrics are pointed up: our usage continues to be great, our mix of users.”
And while we would contend that “$520 million” is a metric that most certainly seems to be trending downward, with all the force of a plunging meteor, Shell doesn’t appear to actually be lying through his teeth here. The fact is that pretty much all of the major streaming services operated at severe losses during their first years of development, spurred on by technical costs, the natural slowness of early subscriber buy-in, and, most pressingly, the need to lay out huge amounts of money to secure a content library to lure viewers in with.
(Licensing the stuff produced by your own parent company, which has become more and more standard over the last few years, can help there, of course, but even then you’re taking losses on the revenue you’d get by shopping The Office or whatever out to someone else.)
And it’s not just Peacock—HBO Max reported something like $1 billion in lost revenue during its first quarters of life. The assumption here is that the costs the companies are paying are worth it if it gets them a solid subscriber base, one that will stay tuned in for years on end of recurring subscriptions. Peacock has also gone out of its way to goose its revenues in recent months by serving up ads on its lower-cost tiers, and touted the success of its hybrid release of Halloween Kills earlier this month.
The upshot of this is that all of these streaming companies are operating in a realm where losing $520 million in a couple of months only sounds bad, really; everybody is striving to get to the Netflix place, where you have a license to print money just for keeping the servers on.