Peacock is free. That may be the transmission service’s not-so-secret weapon

If you’re tired of the parade of new streaming services that launch every two months, you’re not alone. But the last to arrive, Comcast-owned NBCUniversal Peacock wants to snap you out of your stupor with something the others won’t match: a free option.

Peacock It launches on Wednesday and, once again, is another striking new service from a media or technology giant. Like Disney Plus, HBO Max, and Apple TV Plus that came before it, Peacock hopes his particular recipe for TV shows, movies, and originals will hook him into his vision for the future of TV. For you, these so-called streaming wars affect the number of services you must use, and pay, to watch your favorite shows and movies online.

But unlike the rest, Peacock has a free tier. Starting Wednesday, Peacock will offer approximately two-thirds of its free 20,000-hour catalog for anyone to broadcast in the United States, provided they are willing to see advertising.

This type of free, ad-based video on demand is not innovative. It even has a jargony acronym, AVOD. But popular AVOD services like Pluto TV, Tubi and Roku channel don’t waste time making originals. (Editor’s note: Pluto TV is owned by ViacomCBS, the parent company of CNET.) And AVOD services certainly don’t have high-profile exclusives at surprising prices, such as Peacock’s $ 500 million deal to take away The Office Netflix. as of January.

That means Peacock has the exclusive content bait just like Netflix, Disney Plus, and HBO Max, but with a free ad-supported option. It is the first service in years that combines both worlds in one package. And together, those factors can land Peacock at a sweet spot, such as the coronavirus pandemic It has made the combination more meaningful than ever.

“Even before the crisis began, we were predicting that 2020 would be the year that AVOD would cause a stir in the United States,” said Kevin Westcott, one of the leading media researchers at Deloitte. The winning model, he said, has been consistently exclusive content that draws people in and a large and diverse library that keeps them close.

People are seeing more streaming services than ever in the pandemic, and price has become a lesser hurdle for people who subscribed to new video subscriptions during the crisis compared to before, according to a study by consulting firm Activate. .

But the main reason why people cancel a video subscription now? Since the pandemic began, it has become cost, according to Westcott.

“During this crisis, [cost] it became more of a consideration than it was in the past, “he said. That means for Peacock,” the timing is good, even if launching a service in the midst of a pandemic is challenging. ”

Free trial versus free level

None of Peacock’s direct competitors offers a free tier, but many are leaning toward free trials so you can see their services before paying. Apple TV Plus and HBO Max offer a seven-day free trial standard and have offers that give certain people extended trial periods beyond one week. Even the industry leader Netflix offers a free month for new members.

Peacock is also in the free trial car. In addition to its limited free tier, Peacock unlocks a full access pass to its full library if you pay. These premium levels cost $ 5 a month with advertising, or you can upgrade to an ad-free version for $ 10 a month.

To encourage people to try these paid levels, Peacock offers a free seven-day trial standard, as do HBO Max and Apple TV Plus. And just like them, Peacock also has an extended free trial agreement: anyone who signs up through the Peacock Android app, or any other platform run by Google, gets the full Peacock library with ads until October 15.

These free trials are an important gateway for new paid subscribers. But without a free option after a test, Peacock’s competitors lack a smooth exit ramp for people who no longer want to pay. Instead, you enter an all-or-nothing world: either pay and get everything, or leave the turkey cold. (Or find a friend or loved one to share a password, not that anyone does.)

Peacock’s free tier could turn out to be a smooth exit ramp from a free trial, and may end up being crucial. Although people are signing up for more services during the pandemic, they are also canceling more streaming services, according to Deloitte. That means getting people to try a new service has never been easier, but maintaining them has become even more difficult.

And after cost, the number 2 reason people cancel a streaming subscription is because a free trial or discount is up, Westcott said.

Announcements, announcements, announcements

Those trends have developed more dramatically for AVOD services, which are always free with ads like Pluto TV, Tubi, and the Roku channel. The average number of AVOD services people use now has doubled since shelter-in-place practices began, according to Activate, from 1.5 services per household to 3.1.

The reason is that people don’t really hate ads with their streaming shows and movies, as long as there aren’t too many. Consumers say they are willing to accept up to seven minutes of advertising an hour on a streaming service if it’s free or cheaper than it would otherwise be, Westcott said.

That’s a lot less publicity than people deal with on normal television. The TV broadcast averages over 14 minutes of advertising per hour, and the cable averages over 16 minutes, according to Nielsen data from January to May.

Peacock plans to keep its advertising load below the breaking point of seven minutes, at about five minutes an hour. And it’s generally at the low end of current AVOD services. Tubi, for example, has between four and six minutes of ads per hour. The Roku channel has about eight minutes, the company said in August. And CBS All Access said in 2016 that its $ 6 a month level has approximately 12 minutes of commercials. (Editor’s Note: CBS All Access is owned by ViacomCBS, the parent company of CNET.)

But just because Peacock is the first in the latest wave of new services to have an advertising level, it won’t be the last. HBO Max, which at $ 15 a month is generally the most expensive streaming service of its kind, will launch a cheaper, ad-supported tier early next year, new AT&T CEO John Stankey said in May. While advertising for HBO Max will lower the cost of the service, you’ll still have to pay.

In fact, the last time a streaming service had three tiers like Peacock’s was in late 2015. Hulu, at the time, tested three tiers: a limited free tier with ads, a paid tier with fewer ads, and more content. , and the most expensive subscription with no ads at all. Hulu’s free level lasted for about eight months before disappearing.

That does not mean that Peacock’s attempt for the same concept is condemned. And Peacock’s leadership relies on his free tier to become the hero of the serve.

“It’s free: that’s the big differentiator, and I don’t know if everyone has connected all those dots,” said Matt Strauss, Peacock president, in an interview last month. “No one has really done that.”