Image: Olympics, NBC
It was recently announced that there will be a $2 price increase for Peacock subscribers in July. Not coincidentally, this price hike is timed to align with the summer Olympics, whose streaming home in the US will be Peacock. The value of exclusive access to this major sporting event will likely justify the platform’s increased price tag in the short term for many customers and will serve as a powerful incentive to acquire new subscribers. However, to ensure that this is not a short term rush followed by a massive churn event, the platform will need a forward looking plan to retain as many of the new sign-ups from the Olympics as possible.
Parrot Analytics’ Pricing Framework gives a good sense of the value Peacock provides to subscribers, how competitively priced it is relative to competitors, and how any upcoming pricing changes will affect its value proposition to consumers.
Currently Peacock Premium Plus costs as much as Paramount+ with Showtime ($11.99/mo.). Although Peacock has lower demand for the shows and movies in its catalog than Paramount+ with Showtime, it still looks like a good value for consumers in the wider streaming landscape.
Disney+ has almost the same level of demand for its catalog as Paramount+ with Showtime but costs $2/mo. more making it look expensive given what it has to offer consumers. However, slightly overpricing a standalone Disney+ subscription could be working in Disney’s favor by incentivizing subscribers to trade up to the attractively priced Disney+/Hulu bundle.
If Peacock raised its prices by $2 today, it would cost as much as Disney+ but have less demand for the shows and movies on its platform than either Disney+ or Paramount+. This might make sense while it has the Olympics, but in the longer term it may have to make some changes so subscribers can rationalize the higher price. One of the best ways for a platform to keep its churn rate in check is by increasing the demand for exclusive content on its platform. This is an area where Peacock has had recent success with movies like “Oppenheimer” and original series like “Ted.”
In the past year, Peacock discontinued its free tier and also ended its free bundle for Comcast’s Xfinity customers. These changes are in line with broader streaming industry shifts to focus on profitability including moves to crack down on password sharing, reducing the output of new content, and outright raising prices. While these moves make sense from a financial perspective, hiking prices without convincingly delivering underlying value to consumers runs the risk of increasing churn.
