Roku puts a Peacock feather in its cap by signing deal with NBCUniversal (185.36 +24.89)
Roku (ROKU +15%) is streaming sharply today as the company announced a deal with Peacock, which is NBCUniversal's new streaming service, wherein the Peacock app is now available nationwide on the Roku platform. NBCUniversal is owned by Comcast (CMCSA). There have been reports of tense negotiations between the parties in recent weeks and we had some fear a deal would not get reached. Clearly investors are excited about the news.
Peacock is relatively new in the streaming world, having launched in July 2020. Peacock was already available on Apple devices, Google platforms/devices, Microsoft's Xbox, VIZIO SmartCast TVs, and Sony PlayStation 4. However, a notable missing platform was Roku. Peacock will benefit from Roku's huge popularity -- Roku reported 43 mln active accounts in Q2.
This is a big win for Roku as Peacock adds a huge amount of content from NBCUniversal, a massive media player. Peacock provides access to more than 20,000 hours of on-demand movies and shows, as well as live news and sports programming. Peacock Premium will sell for $4.99 per month. Viewers may also upgrade Peacock Premium to an ad-free tier for an additional $5.00 per month.
The press release does not provide details on what Roku's payment will be, however, Roku typically gets a slice of the monthly subscription fee plus advertising revenue. We do not have precise numbers though.
It was good to see Roku add a major content provider even at a time when the company is losing its aura as a neutral party. A big reason why Roku grew so quickly was because it did not compete with content providers. Even though Roku does not yet produce its own content, Roku is increasingly in competition with other content providers through its own ad-supported app. So, it's a good sign for future content deals that Peacock was still willing to partner up.
In addition to Peacock being a nice feather in Roku's cap, we also think this deal could spark movement with respect to Roku's ongoing negotiations with AT&T (T) and WarnerMedia to add HBO Max to the Roku platform. HBO Max would be another huge get for Roku if a deal can be worked out thanks to its popularity and premium content/price.
Roku has seen a boom from tv streamers as people spend more time at home due to the pandemic. This Peacock deal should draw even more consumers to the Roku platform. All eyes will now turn to whether Roku can sign a deal for HBO Max as well.
