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On January 14th, as many know, Peacock (NBCU's DTC streaming service) aired the first-ever NFL Playoff game exclusively for their subscribers. While I plan to cover live streaming sports significantly, I hadn't planned to write about this one specifically, but I've continued to see a number of think-pieces debating whether or not it worked. I'm going to take some time to address some of the larger talking points and give readers a more complete picture of the deal, instead of the frequent outsider's "I Told You So" opinion I've seen a lot of over the last two weeks.
As we dive in, let's first address the cost. We understand that the asking price for the game was a whopping $110M for the right to stream that game exclusively on their service. This is the first opportunity to debunk some of the takes I've seen. At the time of the game, a subscription to the ad-tier was $6/mo, so quick napkin math would tell you that they'd need 18.3M new subscribers to break even. And this is where all the initial takes begin to break down.
The game itself had 23M (reported) viewers, and in the fine print, you'll see that number also includes the local broadcast audiences in Kansas City and Miami. So let's look at our layers of this viewership:
28M - The number of US Subscribers reported by Peacock at the end of Q3 2023.
27.6M - The total non-concurrent reach of the Dolphins-Chiefs game at any point in the broadcast from kickoff to final whistle.
24.6M - The peak audience, when the most active people were viewing, which occurred in the 2nd quarter at about 9:15 PM ET.
23M - Average Minute Audience - This is the average size of the audience reported throughout the game, including linear viewers.
22.3M - The total number of Peacock streamers for the game without the linear audience
700K - The total number of households watching through the local NBC Affiliate channels in Miami and Kansas City Metro Areas, a group that was included in the 23M person total.
Before one could assume Peacock drove 18.3M subs, they would also need to factor in pre-Wildcard Peacock customers that watched the game. With ~28M customers active in Q4, you could easily expect 5-7M (or 18-25%) of those existing customers were tuned in to watch the game. At 5M customers at the low end, that leaves about 17.3M customers to potentially sign up and instantly knocking them out of the money based on our 18.3M number from earlier.
Nielsen doesn't use First Party data, so these numbers could be wrong, but not likely by more than a couple million. We know this because, in 2022, Prime Video released their TNF metrics after a ton of blowback about low viewership, and their side of the story. Now who should we trust? I say the streamer because while they may withhold information for some shows, it doesn't mean they would intentionally lie about others.
Source: The Athletic
Based on this, Nielsen underreported the numbers by an average of 1.6M, and given this was the first playoff game for streaming so who's to say they didn't make a first-time mistake one again? Conversely, one could ask would a streamer call out Nielsen's numbers if they were overreported? And a simple answer is no, because everybody loses; the streamer will be told their lying, and people will lose trust in Nielsen's data.
With all this being said, it doesn't really matter and that's why I'm writing this blog post. Among the many mathematicians calculations, I'm yet to see any of them talk about ad revenue, which is what the streamers getting into live sports is all about.
When it came to advertising revenue from the game, I'm yet to find a number that I trust, but if it's a rumored $50M, that target for subscriptions falls down to 10M, a number that feels much more realistic.
The last note that I want to bring up is customer acquisition costs. Everybody has them, and to assume that Peacock could pull a move like this and account for customer acquisition is just bad accounting. I'd expect that $10M on their $110M total was for this specifically. So now we're talking about $100M in COGS, $10M for CAC, and customer acquisition cost for 10M subscribers is $1 per customer. Comparing that what Marketing Brew reported in January 2022, $1 is much better than $200.
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