NBCUniversal is banking on a big Olympics boost for Peacock. Will they get it?

When the Tokyo Olympics opens Friday, NBCUniversal will finally have an opportunity to grab a big TV audience and give its fledgling streaming service Peacock a lift.

The broadcasting company has long showcased its television networks during the Olympics and will once again chase ratings gold for NBC’s primetime presentation of the Games.

But this summer, NBCUniversal also must persuade consumers — particularly younger ones who don’t watch broadcast TV — to sign up for its ad-supported streaming service, Peacock.

And NBCUniversal must contend with COVID-19 pandemic curveballs.

“They are going to be walking a tightrope the entire time,” said Alice K. Sylvester, a partner at the New York media consulting firm Sequent Partners.

NBCUniversal has been holding its breath for more than a year. In March 2020, organizers announced a year-long delay of the Tokyo Olympics, delivering a blow to NBCUniversal, which paid about $1.3 billion for U.S. broadcast rights to the Tokyo Games and was desperate for live programming in the middle of the pandemic.

The network wanted to use the 2020 Games to generate more than $1 billion in advertising sales and help launch Peacock, which offers free and paid tiers.

But without the Olympics platform, Peacock got off to a wobbly start.

Now, NBCUniversal is poised for its do-over amid a worsening health crisis in Japan. Because of a rise in COVID-19 infections and a low vaccination rate there, spectators will not be permitted at most Olympic venues. NBC producers will have to find other ways to whip up excitement surrounding the athletes.

The network will continue its tradition of producing a nightly primetime program that showcases the most compelling events, such as performances of gymnastics star Simone Biles and swimmer Katie Ledecky. But because of time differences with Japan, most events will unfold when the majority of Americans are asleep — or in the early morning. Viewers probably will know the results long before NBC’s primetime program airs.

Cue Peacock, which will provide live coverage of thousands of Olympics events.

“NBC is trying to serve two totally different audiences,” Sylvester said. “And they are looking to build Peacock for the future.”

The pressure is on Matt Strauss, a longtime executive at parent company Comcast and an early advocate of video on demand.

Last year, Strauss was promoted to chairman of NBCUniversal’s direct-to-consumer and international networks, which includes responsibility for Peacock and ticketing service Fandango.

“We’ve had to navigate a lot of unforeseen challenges,” Strauss acknowledged, noting that TV and film production also shut down in March 2020, leaving Peacock with few original programs at its July 2020 nationwide launch.

“But if there’s a silver lining to the dynamics of a global pandemic, it’s that we feel that we now are in a much better position to tap into the Olympics than we would have been a year ago,” Strauss said. “I’m proud of what our team has accomplished in the last year.”

Comcast this spring announced that 42 million households had activated Peacock accounts, demonstrating an awareness for the service. Still, executives acknowledge that only about a third of those households — roughly 14 million — use the service regularly.

Peacock hasn’t gained the traction of industry leaders Netflix, which has nearly 74 million domestic subscribers, and Disney+, which has an estimated 38 million domestic subscribers, according to research firm MoffettNathanson. Those services rely on monthly subscriber fees, unlike Peacock, which derives much of its revenue from advertising.

NBCUniversal already has booked $500 million in advertising commitments for Peacock for the upcoming TV season.

The streamer is available in three options: a free basic tier, a $4.99-a-month premium service (the most popular plan) and a $9.99-a-month plan with limited ads.

But, in a worrisome sign, Peacock has just 3 million paying customers, according to an estimate by MoffetNathanson. (Comcast executives disputed that, but they declined to provide the actual figure).

“Peacock hasn’t given us a reason to be a subscriber,” said Eunice Shin, L.A.-based head of media and entertainment for the consulting firm Prophet. “But they’ve had challenges that none of the other streaming services have faced.”

Philadelphia-based Comcast also has a different set of priorities. Comcast generates billions of dollars a year selling cable-TV packages to customers in its markets, including Northern California, so it is loath to give consumers more reasons to cut the cable cord.

Still, the company has an incentive to have a robust streaming service. Comcast is the nation’s largest broadband internet provider, and consumers need internet service to stream video.

Comcast provides Peacock at no additional cost to subscribers of its
Xfinity cable service and its Flex broadband plan. Another large cable company, Cox, also provides Peacock to customers, and Comcast recently struck a deal with Charter Communications, which provides service in the Los Angeles region, to offer Peacock to its Spectrum customers.

Comcast and the other cable companies believe Peacock could play an important role in customer retention.

“The way we are measuring success may be different than how others are measuring it,” Strauss said. “We’ve seen a lot of people sign up for the free tier … and then switch to the $5-a-month or $10-a-month plan. We have a vision and a strategy.”

Analysts have questioned, however, whether Comcast, which is known for its fiscal restraint, has the stomach to spend huge sums to bulk up Peacock’s programming library to attract more consumers.

“Comcast is trying to walk a middle path,” said Brian Wieser, global president for business intelligence for the advertising colossus GroupM. “They have made an aggressive commitment, but they know that investing more in Peacock will take away resources from their higher-profit business.”

Strauss dismissed suggestions that Peacock doesn’t have enough programming to compete.

He cited the streaming service’s lineup of popular TV shows, including “The Office,” “Parks and Recreation” and “Yellowstone” and such movies as “Harry Potter” “Jaws” and “The Godfather.” This month, NBCUniversal premiered “The Boss Baby 2″ on Peacock the same day it arrived in theaters, to boost interest in the service. Beginning next year, recent Universal movies will run on Peacock.

The service also has been adding original programming, including “Girls5Eva” and “Dr. Death,” with Alec Baldwin. In addition to the Olympics, it has other sports such as professional wrestling and the NFL.

“There’s an opportunity for us to be one of the major streaming services in the market,” Strauss said. “You will see us invest to take Peacock to the next level, and the Olympics can only add rocket fuel to what we are already doing on Peacock.”

The streamer will provide live coverage of gymnastics and track and field and carry highlights and full-event replays of some of the company’s 7,000 hours of Olympics coverage.

Subscribers to the $4.99-a-month premium tier will have access to the U.S. men’s basketball games. Peacock will feature popular talent, including Rich Eisen and Amber Ruffin, and a show called “Olympic Highlights With Kevin Hart and Snoop Dogg.”

“The Olympics will be their big test,” Shin said. “And they can’t afford to miss this opportunity.”