When the coronavirus quickly spread around the world, NBC had a big decision to make. Move forward with the April launch of Peacock, its new streaming service? Or postpone? 

NBC had expected to use its broadcast of this summer’s Olympics to promote the new service during its initial rollout with consumers, but then the games were rescheduled until next year due to the pandemic. At the same time, many of the original programs which had been commissioned for Peacock were abruptly forced to halt production.

Even so, NBC executives ultimately decided to let Peacock take flight. During a press call on Monday, Matt Strauss, chairman of Peacock, said that amid the sudden virus-related economic hardship facing consumers, launching a free service “is arguably more relevant now than at any other moment.” Initially, Peacock will be available only to Comcast subscribers. But Strauss said that NBC is now considering moving up the launch of its nationwide service, which was originally scheduled for July. “People are seeking quality entertainment choices that are truly affordable,” he said, “and nothing is more affordable than free.” 

Peacock will arrive richly stocked with more than 600 movies and 400 TV series, including reruns of NBC shows such as “The Office.” And it will feature the exclusive streaming rights for a bunch of new Universal films, such as “Fast & Furious 9” and “Jurassic World 3.”

Peacock will also have something strange and unfamiliar to many streaming-TV consumers — commercial interruption.  

NBC executives see Peacock as a novel opportunity to reimagine TV advertising in the streaming era. “We were able to go back to drawing board for Peacock and say, ‘What if we could start TV completely over knowing what we know and what works?’” said Josh Feldman, head of marketing and advertising creative at NBCUniversal.

The inclusion of ads will distinguish Peacock from many of its competitors in the increasingly fearsome field of streaming video-on-demand services. At the moment, most of the streaming megafauna, including Netflix, Amazon Prime Video, Disney+ and Apple TV+, don’t feature ads. 

“With the entire world at home, is there anything we can do that can provide a positive?”

By making it free, NBC is hoping Peacock will grow quickly, reaching  30 million to 35 million accounts by 2024, and begin turning a profit by its fifth year. NBC’s owner, Comcast Corp., is planning to spend US$2 billion on Peacock over the next two years, making it one of the industry’s biggest bets to date that viewers will accept ads in exchange for a free service. 

The key to making the ads work, according to Feldman, will be playing creatively with the interactivity of the medium. While advertisers have long touted their desire to listen to their customers, now they actually can thanks to new technology, such as  voice-activated TV remote controls. 

Laura Molen, NBCUniversal’s president of advertising sales and partnerships, offered some hypothetical examples of how this might work. If Peacock viewers say, “Target back to school” into their remotes, they could get a text from the retailer with a back-to-school shopping offer. If they hit pause while watching “Fast & Furious,” they could get a text message with a cheap movie-ticket offer to see the sequel in a nearby theater. When they search the category “Crime and Thrillers,” they might see an ad for a home security system. “Consumers are looking for this type of convenience,” Molen said.

For anyone who finds such hyper-targeted ads more creepy than convenient, there will be another option — an ad-free version of Peacock that will cost $9.99 a month. 

NBC is promising to be judicious with its futuristic ad deployment. Advertising on Peacock will be limited to five minutes per hour. That’s less than half the typical ad load on linear TV.  In some cases, after a viewer watches several episodes in a row, a Peacock advertiser will serve up the next one commercial-free. 

All of the innovations in ad engineering will be subject to review. Following the launch, NBC plans to host something called the Peacock Streaming Council, a group of NBC executives and advertisers that will meet every three months to discuss whether the new ad formats are working. 

Before the coronavirus pandemic hit, advertisers were lining up for the opportunity to jump into streaming on-demand video. Dave Campanelli, chief investment officer at Horizon Media, said there are currently few quality places where marketers can get their messages across. “We need a place in the streaming world to move our dollars to as TV continues to decline,” Campanelli said.

He added that streaming viewing has been up since the pandemic began and that with people staying home, they might be more likely to try something new. “I think it only strengthens the need for an ad-supported service like this,” Campanelli said.

But Peacock arrives at a moment when marketers are cutting their budgets due to the Covid-19 crisis. In December, the ad-buying company Magna Global predicted that U.S. spending on national TV would be flat in 2020. Then, in March, it revised the estimate, predicting the market will now drop 13% this year. Brian Wieser, global president of business intelligence at the advertising giant GroupM, said that Peacock is little different than traditional television in the eyes of advertisers. And in a post-coronavirus world, “the baseline of available ad budgets is smaller,” he said. 

NBC declined to say how much sponsors are paying to be on the service. At an event in January, Linda Yaccarino, NBCUniversal’s chairman of advertising and partnerships, said Peacock had already sold “hundreds of millions” of dollars in advertising. The service’s initial advertisers will include State Farm, Target, Eli Lilly, Apartments.com and Unilever. They are locked into 18-month deals. 

There is already some evidence that consumers will tolerate streaming commercials in exchange for a lower priced service. The majority of Hulu subscribers choose the US$5.99-a-month plan with ads over the ad-free version, which costs twice as much.

Recently, free streaming services have grown more attractive to entertainment conglomerates. Last year, ViacomCBS Inc. bought Pluto TV for $340 million. Fox Corp. acquired Tubi in March for US$440 million. According to the Wall Street Journal, NBCUniversal is discussing acquiring Vudu. Pluto, Tubi and Vudu are all ad-supported streaming services offering a menu of old movies and TV reruns. 

Not everyone is so excited about the idea of resuscitating ads for the streaming age.  In January, Netflix Inc. Chief Executive Officer Reed Hastings said he won’t add commercials to the world’s most popular streaming video service because Google, Facebook and Amazon already dominate the online ad market. “There is not easy money there,” Hastings said. “We want to be the safe respite where you can explore, get stimulated, have fun, enjoy, relax — and have none of the controversy around exploiting users with advertising.”

On the eve of the launch, Strauss said that Peacock could benefit from viewers looking for an escape during a difficult time. In recent weeks, he said, many Comcast cable viewers have sought out shows that are “comforting, familiar and even nostalgic.”

“Many of us, in a small way, are really just trying to figure out with the entire world at home, is there anything we can do that can provide a positive?” he said. “We see Peacock as an opportunity to do that.”