Should Peacock Remove Its Free Tier?

Back in 2020 when the media conglomerates were starting up their streaming services, I would’ve placed money on Peacock having the winning strategy. While the others were starting subscription services, known as SVOD, and some with free ad-supported services, known as FAST or AVOD, Peacock stood out as both free and paid. Users could try out the service for free with access to much of the platform including a live TV-style section, and then if they want access to the entire catalog of their shows like The Office or the original Peacock shows, they would have to bump up to the Premium version either with ads or without. In my view, it seemed to make sense by having one app to get NBCUniversal content, where users could try the app easily without starting a trial period.

When CBS and Viacom merged in December 2019, they brought with them CBS All Access, Showtime, and Pluto TV respectively, and it took a little over a year for them to finalize their combined streaming strategy. Seeing Peacock’s launch, I thought it would be best for the company to throw their eggs in the Pluto basket, seeing as that was the more popular service, and have the same free Pluto service where users could then pay for a premium Pluto plan to gain access to the rest of the service as Peacock had done. However, that did not happen. March 2021 saw the rebrand of CBS All Access to Paramount+, Showtime was available either by itself or a possible bundle, and Pluto remained as is. Initially I thought it was confusing and fragmented, and had doubts about ViacomCBS now named Paramount’s streaming future.

Unfortunately for Comcast, it seems I was wrong. The numbers released for Q2 indicate 28 million active users, and 13 million paid subscribers. Compare that to nearly 40 million paid subscribers to Paramount+, and 68 million active users on Pluto TV. To be fair, Paramount+ is no Disney+ or HBO Max, both of which have numbers that put Paramount+ to shame. Still, for a company like Paramount whose strategy is rebooting everything popular from the past, South Park movies (because they sold the show rights to HBO Max until 2025 in 2019), Star Trek, and Yellowstone spin-offs (because Paramount sold the rights to the original show to Peacock in 2019 as well. Great forward-thinking moves, Viacom!), it’s certainly surpassed my expectations.

So, how can Peacock improve? They have popular sports and the Olympics, they have live SNL and other NBC shows, and they spent a lot of money on the WWE. Certainly the original content could be stronger, as the only show on Peacock that I’m aware of is Bel-Air, which I’m still convinved is an SNL sketch. Beyond the content, I’m now wondering if the strategy of free and paid in one service is confusing to consumers.

When you download Pluto, Tubi, The Roku Channel, or Freevee, you know what you’re getting; an ad-supported streaming service where you may not find everything you want, but all of it is free, so it can be fun to scroll through and see what you get. In the case of Pluto and The Roku Channel, they offer hundreds of channels presented like good old-fashioned linear television, bringing back memories of channel surfing and finding some odd-ball show or movie you may have never chosen or thought to watch on your own. And in the case of Pluto TV, it has the added benefit of having channels and on-demand content from the big siblings CBS, Paramount+, and Showtime, which has the feel of added value to the service, rather than corporate advertising. From there, a viewer may be more inclined to subscribe to the premium platforms to get more of what they like watching already. Plus, since you have to subscribe to gain access to Paramount+ and Showtime, you’re already in the premium service with full access to the entire service right away. Whether you’re on the free Pluto, or the premium Paramount+ or Showtime, you always know what to expect.

When you start up a free Peacock account, there’s premium content you can’t watch listed in categories on the front page. Sure, Peacock too has a channels tab for free “live TV,” but it’s no where near the selection you can find on other services with only about thirty options to choose from. From the perspective of someone looking for a free service, you’re presented with a fair amount of things locked behind a paywall. If you’re going into Peacock with an open mind on a Premium account, you’re likely going to start out with the free plan to give it a test drive. At this point, the premium content found on Peacock doesn’t seem to be lighting the world on fire. There’s plenty of good shows and movies on the platform, but when it comes to exclusive premium shows, they aren’t generating a ton of buzz. So that leaves sports and WWE content, which both have a strong dedicated fanbase, but outside of that, it’s a bit of a tough sell. Adding all that up, if you’re looking for a free service, you’re going to be disappointed often with the amount of premium content you need to pay for, and those open to paying for more premium content will be disappointed with the dearth of it. Either way results in disappointment.

So, what can Peacock do? I say get rid of the free plan. When you think of the big premium streaming services, the goal is to think high-budget scripted premium showcases. When you think Peacock, you’re either thinking a lackluster free service with content you have to pay for, thus causing people to lose interest in the service and stop using it, which may explain its falling active user numbers; or you think of a lackluster premium service with not enough content, which explains the stagnant subscriber numbers. By Peacock investing in its premium side, it doesn’t have to concern itself with how the free side will be presented, and can focus and hopefully grow in the premium end. The content still has to be good, but I also don’t think it had a chance when users were given the choice to never check it out through the free side.

But that doesn’t mean NBCUniversal should give up on a free service. In fact, they already have one ready to go, it just needs a little attention: Xumo. After Viacom bought Pluto TV and started injecting their content on the free service, a pre-Peacock Comcast bought the similar Xumo service, and added a few NBCUniversal properties to it. During this time, Pluto was continually expanding its library, enhancing its user interface, and investing heavily into marketing. Only recently did Xumo recieve an updated user interface, which may be an indication that they will want to invest in the platform. If Peacock were to split off its free plan, market the service heavily as they have done with Peacock and as competitors Freevee and Pluto have experienced, and have the same kind of content from Peacock to Xumo, I feel it would give Peacock a more premium feel, and free users would have expectations set correctly with a service that only offers free content.

If you look at the massive growth of Pluto, Tubi, Roku Channel, Freevee, and others, I would argue a big reason for their success is properly setting expectations. You can expect those services to show you free ad-supported content, and when you look at the numbers of active users, they’re doing something right. While Peacock’s stagnant growth could be blamed on a lack of strong content, you’d at least think the active user count of its free plan would climb based on the saturated subscription market as a whole struggling, while AVOD services whose users are not expecting premium content are rising dramatically. If Xumo were to absorb Peacock’s free plan, maybe with some slivers of Peacock content like sports and Olympics, maybe some WWE, some news, maybe a few episodes of original shows, and the existing free movies and shows with maybe a few more from the NBCU archives, I think Xumo could be more competitive than the free plan of Peacock in the AVOD market, and Peacock could be more prestigious in the premium SVOD market.