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Peacock’s Pyrrhic NFL Victory

Taylor Swift celebrates with fans during the AFC Wild Card Playoffs between the Miami Dolphins and the Kansas City Chiefs at GEHA Field at Arrowhead Stadium on January 13, 2024 in Kansas City, Missouri.
NBCUniversal streamed last Saturday's NFL wild card game between the Kansas City Chiefs and Miami Dolphins exclusively on Peacock, forcing fans of Travis Kelce and Taylor Swift—and Mahomes and Tua and Andy Reid’s frozen mustache—to shell out an extra $5.99 a month Photo: Jamie Squire/Getty Images
Julia Alexander
January 16, 2024

As we all know, the most whiplash-inducing pivot in media history is currently playing out: After years of inactivity, legacy TV giants are steadfastly trying to nudge their audiences onto streaming platforms—without pissing them off or atrophying their still-profitable linear businesses. It’s a nearly impossible feat, but NBCUniversal gave it the ol’ college try last weekend by streaming the NFL wild card game between the Kansas City Chiefs and the Miami Dolphins exclusively on Peacock, forcing fans of Travis Kelce and Taylor Swift—and Mahomes and Tua and Andy Reid’s frozen mustache—to shell out an extra $5.99 a month. 

Of course, the NFL has been streaming-curious for a few years now. Amazon has had Thursday Night Football for two years, and even promiscuously broadcast the league’s first “Black Friday” affair, which doubled as an ersatz shopping experience. The specter of a streaming-only playoff contest, for which NBCU paid a reported $110 million to broadcast, seemed like the natural next step for both the league and its broadcast partner. And the decision to put Chiefs-Dolphins on Peacock rather than the less enticing Browns-Texans seemed like an indication that both the league and NBCU weren’t screwing around. They were intent on running an experiment with their best product.

Sure, this upset many people, as is often the case. (As Matt Belloni noted on Sunday, Disney caught flak a decade ago when ESPN became the first cable network to exclusively broadcast playoff football.) New York Congressman Pat Ryan was so incensed that he fired off a letter to the NFL and NBC calling the move “a bait-and-switch” and “a disgrace.”

But the strategy worked: 23 million people tuned in, according to NBCU, which called the game “the most streamed event ever in U.S. history.” Peacock shot to the top of the Apple App Store, indicating a huge surge in downloads. We won’t know for several months (perhaps more than a year, really) how many of those new customers were one-and-dones who churned out soon after paying that initial $6, or whether they discovered enough new content (or convenience) to stick around. More broadly, though, the game demonstrated the power of live events—and must-watch sports, in particular—to drive meaningful changes in otherwise stubborn consumer behavior. Or at least it seemed to. 

The Pivot to Cable on the Internet

The pivot to streaming is all about synchronizing audiences—trying to anticipate, guide, and reward a viewer’s attention by creating the perception of value. In the case of the wild card game, NBC wasn’t changing the format of the contest, the broadcast talent lineup, or the overall experience beyond where to access it. The experience felt identical to NBC’s Sunday Night Football, the most watched show on linear. The distribution changed, and that may have been frustrating, but new customers knew what they were in for. 

Some customers may have been frustrated about having to download Peacock, but most already accept that some NFL viewing comes with a cost. According to the research firm Kantar, football is more associated with a “need” to sign up for a service than any other sport in the U.S., and football games were responsible for 40 percent of SVOD signups in Q3 2023. In the U.S., a heavily saturated streaming region where customers feel satiated by Netflix, the NFL still brings in big business. 

Will they stick around? In 2021, NBCU put a ton of Tokyo Olympics content exclusively on Peacock, which led to its biggest month in sign-ups to that point, according to research firm Antenna. But the customer lifetime expectation for those who subscribed for the Tokyo Games was actually 11 percent lower than the eight-week benchmark (i.e., those who signed up for Peacock via non-Olympic content). Sports are usually enough to get grumbling customers in the door, but aren’t enough to keep them month after month. 

Peacock, to be sure, has evolved a great deal from 2021. Demand for Peacock originals has more than doubled in that time, according to Parrot Analytics, where I work as director of strategy. “Catalog demand,” or demand for everything on the platform including licensed fare, has grown from 6.5 percent to 8.8 percent of total demand share across platforms. The Peacock of today offers something for new subscribers—WWE matches, a Ted show, a John Wick show, Oppenheimer on Jan. 16—to make them feel like the subscription is worth it. Perhaps football fans will find this content and stick around?

Peacock’s wild card game may have offered a cable experience on a streamer, but streaming isn’t cable—at least not yet. As I’ve noted before, the consumers’ desire to re-create cable on streaming suggests just how ill-equipped most companies are to facilitate the pivot. Indeed, as much as every streamer is worried about each other, they are all truly worried about the only player big enough to potentially offer a reboot of this comforting experience: YouTube. It may not be fair to compare YouTube to subscription platforms that pay big money for sports rights. But those comparisons may soon become much more apt. Experiments with Sunday Ticket, which Google reportedly paid $2 billion a year to secure, YouTube TV’s growth as a vMVPD (it may soon surpass Dish to become the fourth-largest player in the space), and the leagues’ interest in the convening power of the main YouTube app suggest where this is all headed. 

One underappreciated linchpin of streaming strategy is the strength of the supportive slate after an event, like the Olympics or an NFL playoff game. This is the beating heart of a service (and, of course, it’s where Netflix excels). Streaming, after all, isn’t a pure event-driven business. The lifeblood of a service is consistent revenue. Amazon’s supportive tissue is the Prime retail business. YouTube’s backbone is the combined VOD and vMVPD business—even if customers cancel their Sunday Ticket, YouTube’s goal is increased engagement on its ad platform, where it still draws most of its revenue, and through YouTube TV subscribers who don’t churn because of access to other sports like the NBA and MLB. Not all sports may head to YouTube one day, especially if the FTC has anything to say, but YouTube has figured out a better supportive infrastructure than SVODs like Peacock and Paramount+. 

Netflix C.E.O. Ted Sarandos is among those who have predicted that sports will follow audiences to streaming. And the search for sports fans’ holy grail—having everything in one place, again—will likely prove fruitful. But the future of Peacock and Paramount is as unclear as their corporate parents’ plan for M&A activity. There are only a few players who will likely be distributors, and only a few who want to be sports hubs in the U.S. So today we may be talking about Peacock’s big NFL win, but getting a ton of people to use an app for a football game is comparatively easy. Ensuring an existence as a streaming service in five years requires more than just a couple of big games.