Consumers are starting to feel streaming fatigue, analyst says

Fri, Jan 17, 2020, 1:42 PM

NBC unveiled details on its upcoming streaming service “Peacock” Thursday. The service is expected to launch in July and will have one completely free ad-supported version and two paid tiers of Peacock Premium. The cheaper plan will cost $4.99 per month and will feature advertisements, while the $9.99 version will be ad free.

By offering a completely free ad-supported version, Peacock is attempting to stand out from a crowded field. “This tiered structure is really the right way for them to go. I mean, I think they have the content, they have the distribution,” Ives argued.

A peacock is pictured outside NBC headquarters at Rockefeller Center in the Manhattan borough of New York City, New York, U.S., January 16, 2020. REUTERS/Carlo Allegri

However, that’s not the only way Comcast-owned NBC’s Peacock is planning to differentiate itself. The advertising model is also unique. Peacock is going to limit the amount of ad time to five minutes per hour watched. Ives noted that the strategy might be a smart move for NBC.

“They need to ensure that consumers go on to the platform attracted to it, and then ultimately over time, they can increase that advertising per hour. I think that's a smart move, sort of balancing act in terms of what you want to see. But I think over time, you could see more ads as they have more content.

Ives estimated that the average household in the U.S. is spending about $35 per month on streaming services, and he believes the capacity will max out at $55 per month. For $55 per month, consumers can subscribe to the lowest tier Netflix (NFLX) and Hulu subscriptions, HBO Now, Showtime, Disney+ and Apple TV+. Those six subscriptions would total $53.

“Definitely fatigue out there, but if you look right now, especially with the HBO coming in the spring, there's going to be some winners and losers. But as of right now, we think Peacock's a winner in terms of the way that strategically they've launched it,” Ives said.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.