On today’s episode of Variety‘s “Strictly Business” podcast, Matt Strauss, chairman of NBCUniversal Media Group, expands on the evolution of the Peacock streamer and his view of the “the great re-bundling” that is underway for streaming media.
Strauss, who is a 22-year veteran of Comcast and NBCUniversal, unpacks the deal that NBCU recently struck with YouTube to make Peacock available to all YouTube Premium subscribers, which promises to bring in “many millions” of subscribers when it kicks in next year. Strauss also weighs in on the vision for building out the Peacock platform as a form of membership system that can bring consumers deeper into everything NBCU has to offer, from theme parks to partnership perks with big NBCU ad clients.
Strauss emphasizes that the moves for Peacock and other streamers represents the next wave of growth for the platforms that major media firms have poured billions of dollars into over the past decade. NBCU has gone all in on sports for Peacock because they firmly believe that sports is a huge part of the glue that keeps subscribers paying the monthly fee for the service — just as big-league sports were the epoxy that kept the linear cable bundle together for years.
“Binge viewing is the opposite of urgency,” Strauss observes. “How do you get somebody to open up your app every single day?”
The big news out of Comcast’s Q2 numbers this year was a big milestone for Peacock, the streaming platform that you oversee, reaching profitability for the first time in six years. Matt, what were the drivers what led you to that important benchmark in this past quarter?
We were very proud of the earnings for the media group. It was a real milestone for us both to get to profitability in Q2. But also, we added 2 million subscribers to Peacock, which is the second quarter in a row that we’ve added 2 million subscribers. And so we’re now reporting at 48 million domestic subscribers. And we’ve also had a pretty magical summer. You’ve ‘Love Island,’ which was the No. 1 show across all streaming for the summer. We had the World Cup, as you know, which we were broadcasting and streaming and Telemundo and Peacock, which was the most watched Spanish-language soccer match in history. We also had, our best premiere for Peacock original with five Star Weekend, which, has been our No. 1 scripted original. the other milestone for Peacock, which you may know, is that last month we had our six-year anniversary. Peacock launched in July of 2020. And I think what’s worth noting is if you actually go back and it wasn’t that long ago, although it feels like dog years. the streaming market was very, very different back in 2020 than it is today. And I would say the focus of many media companies was to look at building streaming services that were oriented around scripted dramas and binge viewing and ad-free.
Live appointment TV on a streaming platform? Will never happen, said someone back in 2019.
We were always very clear from the beginning that we saw white space in the streaming market. And I don’t know if that’s partially because part of my DNA comes from Comcast cable. I like to think of myself as a student of the business and how pay television works and the history of how pay television got to where it did, as well as the growth of cord cutting and streaming. We are a broad-based broadcast network, which means that we try to reach a broad household demographic, although we also want to have something for each individual in the home. which means that you have to think broader than scripted dramas. You have to think about unscripted programming and news programming and sports and movies. And so we had a very important aperture around having a broad based streaming service, which really becomes an extension of what we do as NBC. We are a dual revenue stream business. We both license our content and we have an amazing ad sales team under [NBCU chairman of global advertising and partnerships] Mark Marshall. Well, two revenue streams typically is better than one when it comes to any business. And it made sense to us that if streaming was going to continue to evolve and more eyeballs were going to migrate to streaming that the advertisers were going to migrate there as well. And so it was very important that we anchored ourselves as an ad-supported service from Day One.
That was a departure from the pre-pandemic orthodoxy around SVOD.
There was a lot of head scratching. Like, wait, why are you not doing what everyone else is doing? And again, I think it speaks to playing to your strengths, looking for the white space, because there’s always white space in every market. And also having the resilience to have a longer term view. The other longer term view that we had was that live programming, especially sports, was going to be critical to streaming for several reasons. One was the biggest challenge that we believed streaming was going to have was habituation. How do you get somebody to open up your app every single day? Binge viewing is the opposite of urgency. Binge viewing is telling the viewer it’s there when you want it, and so there’s no urgency to it. What you really want, especially if you’re an ad supported service, is to give people a reason to open up your app every single day. You want to drive what I would call a habituation. And then the more times they go into your experience, the more at-bats you have, so to speak, to try to get them into other types of programming.
How do you make the numbers work at a time when sports rights are only going up and up?
Making bets around sports and live programming was very, very critical to our strategy from Day One. That’s what led us to do deals from the WWE to the Premier League to the Big Ten [college football], to the NBA and others. We’ve amassed one of the largest sports libraries of rights. We probably have more sports hours available than any streaming service. And there’s something live on Peacock now every single day. when you kind of take a look at that, that approach, like we’ve been very consistent with that vision and that strategy. I used to say, Streaming is not a sprint. It’s a marathon. And I realize that It’s a marathon at a sprinter’s pace, because things are moving quickly and we need to obviously adapt and move quickly as well. But our strategy has been very consistent. In many ways, we never viewed streaming as a standalone business. We saw it as a derivative of the broadcast business. This is an opportunity for us to take NBC into the into the next evolution of where the market was going. And to manage it really as a portfolio. Maybe what we could have done better is articulate that we’re not necessarily doing what other media companies are doing. We’re not evaluating ourselves just based on subscriber metrics or when do we get to profitability. We are looking at engagement, at churn, at how are we monetizing every subscriber. What’s ARPU [average revenue per user] of that subscriber? Things that take longer holistically to build, but with the belief that this is ultimately where we need to go as a company. And I think that manifested itself in what we shared at our last earnings.
Let me ask you very directly, ARPU versus ARPU — is yours comparable to or even greater than say a Netflix or an HBO Max?
I would say that we’re very competitive, and in some cases we’re higher. There’s a couple of factors for it. One is, 80 percent of our subscribers are on the ad tier. And that has a lot to do with what I just shared. We started with Peacock as an ad-supported service. we didn’t pivot and change course. We’ve just continued to build and execute. And so as a result, we’ve got both subscription revenue and we have advertising revenue, which accumulates towards what you would define as ARPU.
We resisted the urge to just augment our subscriber base by going after bundling until we felt we had taken maximum share of wallet out of the market to really identify those subscribers that we believed would be willing to pay for Peacock directly. We looked at bundling more as the second phase of our growth around what could drive incrementality. Doing bundling deals to get the right economics where you want to make sure that it’s both incremental growth. And if you do cannibalize full-paying subs, you want to make sure you’re more than offsetting that by driving significantly higher new subscribers. And so there’s a calculus to how you do it that we were very cautious about, but we always knew that was going to be the next wave of growth for Peacock.
You just announced a big deal with YouTube Premium that got a lot of attention. Consumers who pay the full freight for YouTube Premium will get access to Peacock. Will it be everything or a limited selection of what’s on the platform. Will they get all access to Peacock, or will it be a limited selection of peacock?
I think it’s maybe helpful just to kind of frame our perspective on bundling. This may come back to my cable roots at Comcast, but if you go back to 2019, I remember doing an interview and this was kind of at the height of cord-cutting and people were subscribing to streaming services. And I was trying to draw a parallel to the cable business. And I said, streaming is actually going to look a lot more like cable in the future. And what consumers are going to realize is that one streaming service is not going to give you enough video calories, because people on average consume five to six hours of video a day. And so you’re likely going to find that people are subscribing to multiple streaming services in the future. The cost of content and sports rights are not likely going to decline, which means that streamers are going to have to take their retail prices higher. That is likely going to create a dynamic in the market where bundling is going to start to form, and the value proposition to the consumer is the more you take, the better the price that is essentially at the cable industry got started. And there’s no reason to think that streaming wouldn’t follow suit.
Another reason why we wanted to place all those bets around aggregating sports. Because if the market did move to bundling, we wanted to ensure we got the right economics. And so that’s what led us to some of the decisions that we made and how we staged the growth of Peacock. Fortunately, I think that we were directionally right. the market is arguably now in its moment where direct to consumer is still very relevant. And it’s certainly a big part of our strategy. But the next wave of growth is going to come from bundling. I think the YouTube deal in many ways is representative of. And so while it’s a bundle where you’re going to get YouTube Premium and Peacock, existing YouTube Premium subscribers in the United States will also now have access to Peacock as well. And so they’re grandfathering, in a way, existing YouTube premium subscribers in the U.S. to now get access and entitled to Peacock. And so that’s going to drive a tremendous amount of growth for us. But it’s also going to drive a tremendous amount of value to YouTube. And we’ve structured the deal in a way where the economics make sense for us.
How are you going to account for these subscribers?
We’re going to pick up many millions of new subscribers to Peacock, which is very typical of any bundling deal. There’s an economic wholesale arrangement per subscriber per month. And so for us, these are Peacock subscribers. They will be entitled to the full Peacock service. They will have the ability to consume Peacock through YouTube channels. We also plan to also in the future, allow them to access Peacock through the app.
In terms of the business relationship between Peacock and YouTube — is it basically the old cable model where, say Cox Cable would pay USA Network a certain number of cents per sub for the right to carry the service?
It’s a bit more nuanced and I can’t get into the exact specifics of how the deal works. But directionally, speaking on YouTube as an example, you today can sign up for Peacock on YouTube and you can either get the ad-free version of Peacock, but we’re also going to be launching the ad version of Peacock. also with this new bundle, which will launch next year. You’ll be able to get access and entitled to Peacock if you subscribe to the bundle. And so it’s just a different way for you to get access to it. And so if somebody signs up for Peacock standalone, typically that’s a rev share model. If somebody signs up for Peacock through the bundle, it’s typically a wholesale model where we’re getting paid a monthly wholesale fee per subscriber for everybody who signs up for the bundle. What’s also important about this is it also gets us more deeply aligned with YouTube on the advertising. We still sell all the advertising on Peacock. We’ve come up with a deal framework that almost makes us indifferent to whether we’re monetizing the advertising in our app versus monetizing the advertising in a channel. That is a huge shift from how things have worked in the past, where we’ve been able to come up with a dynamic with YouTube where we could still charge the same CPMs, still have the same types of ad innovation and targeting capabilities where we can monetize the engagement on YouTube in a manner that almost makes us indifferent to where the consumer is accessing the Peacock service. And so that really allows us to lean heavily into kind of a content-first, platform-second approach, which has always been our vision. which is to get to a place where you start with the consumer and what is the best experience for the consumer.
Peacock has been largely domestic? Would you say that these types of bundling deals are what you’re looking at to expand its international distribution?
We’re still very committed to direct-to-consumer. And so I do think the other elegance of this deal is it doesn’t change any of the partnerships we’ve put in place already, and it doesn’t preclude us from forging new partnerships going forward. And so I do think you’ll see us continue to lean into doing more partnerships. What I’m really excited about is how this could transform our engagement and continue to drive engagement. If there’s one thing that’s really going to define the streaming wars, it’s not subscribers as much as it’s engagement. This partnership is going to continue to help drive engagement of Peacock as we’re looking to chart out the next wave of growth for our business.
NBCUniversal went through a big transition last year with the separation from Versant Media. How have things changed for you this year? Is it as simple as you have a more streamlined focus: NBC, Peacock and Bravo. Or have there been unintended consequences from disconnecting from linear cable?
First, we are still very big believers in pay television. Pay television is a big part of our revenue. Ironically, a lot of the challenges that consumers have today with streaming, I would argue, were solved with pay television. When you talk about the ultimate bundle, no fragmentation, having everything aggregated in one place, you’re really pining for what you had solved. And so we are still very big believers in pay television. I think to answer your question, though, I think it’s accomplished a few things. It’s provided us more focus. The assets that are part of NBCUniversal that remained with NBCUniversal were handpicked for a reason. NBC, Bravo, Peacock, NBC sports, NBC News, Telemundo — these assets work better together. And it also provides clarity around goals and priorities.
The Versant spinoff took a lot of energy in 2025 and became official at the start of the year. Now there’s news last month that Comcast will split up NBCUniversal and Sky from the Comcast cable systems and a standalone company. That’s a lot of corporate transition time. Are you concerned about people getting distracted?
I have been at the company over 20 years. And so for me personally, it’s bittersweet because I’ve spent so much of my career at Comcast Cable, and I’ve spent several years now here at NBC. But putting that aside, it was the absolute right business decision. Having [Comcast co-CEO] Mike Cavanagh, who in many ways is the architect with [Comcast chairman] Brian Roberts of this new structure, it’s really going to be about speed, velocity and focus. That’s the way I would describe it. And so it’s very energizing to know that we’re going to have a tighter portfolio of assets that are going to position us for growth. I think it’s going to allow us to make more streamlined decision making. I think having Mike Cavanagh be the CEO of NBCUniversal [after the split] just to have his strategic leadership is also going to allow us to continue to accelerate our growth. And I think we’re going to be able to be more opportunistic.
Are you a little nervous, though? Because you will after this separation, your quarterly earnings will rise and fall on how well Peacock did and how well your movies do?
There’s no question being part of a diversified company allows you to offset any misses in other parts of the business. And so, what you’re really describing is removing a safety net. I would say the general sentiment of people at NBCUniversal is confidence. We have a tremendous degree of confidence in our movie studio. And again, I’m obviously going to be a bit biased here, but I really believe this. I think we have the best in class operators. whether it’s [NBCU entertainment chair] Donna Langley or [Universal parks CEO] Mark Woodbury or [NBC News Group chairman] Cesar Conde or [Sky CEO] Dana Strong. You’ve got people who understand the business. They are best in class. They are managing world class businesses. And so to your question, while there is the removal of that safety net, the general perspective is we’re ready for that.
What are you all cooking up for Peacock to make your content stickier?
We set out on this journey several years ago to start thinking of streaming more as an entertainment platform, more as a participatory entertainment platform. And that’s what led us to launch vertical video several years ago, because so much of the consumption we saw was happening on mobile. People were swiping and navigating with their forefinger and their thumb. And so to be able to offer live sports in vertical video or even original microdramas in vertical video — you now have that fully embedded into our platform. We started partnering around gaming, but not just any game like gaming that is derivative of fandoms that are on our platform. So for example, we have rights to ‘Jeopardy!’ And ‘Wheel of Fortune.’ You can play right on our platform. ‘Law and Order’ is a huge fandom. We partnered with Wolf Games on derivative games that you could play right on our platform or podcasting. We have a show called ‘The Traitors,’ so why not have a podcast around talking about ‘The Traitors?’ And so our strategy has been very much focused on super-serving the fandoms, to expand the concentric circles to offer them more ways to engage the best place to consume our content should be on our platform.
The other thing that we look very closely at is, one way to drive retention is to also start thinking of Peacock not just as a service that you pay and you get video, but what if there are other benefits and perks that you get and the subscription service starts to feel more like a membership? And so we are going to be testing a membership platform for Peacock as well. And there’ll be different memberships depending on your tenure on Peacock and also how much you engage on Peacock. But you essentially will get and earn rewards.
Like a loyalty points kind of program?
Exactly. And so the rewards can be everything from 25 percent discount at the NBC store to buy merch to if you engage a certain amount, you can get a free Pizza Hut pizza. We’re going to be launching a partnership with Instacart, where Peacock subscribers, as part of membership, will get access to Instacart Plus for free for a year. And so in our ad sales team, we’re also working very closely with prospective partners around other benefits and values. And so again, we’re starting to evolve from thinking of this as streaming to entertainment, from subscription to membership. Again, we’re always charting out what we see as the next white space. This is where we see, at least for NBCUniversal, the next wave of growth for streaming and the broader business as we’re continuing to build out where we see the big opportunity.
