NBC Faces Test of Peacock with ‘The Office’ Jump From Netflix

Gerry Smith, Bloomberg News

(Bloomberg) -- When NBCUniversal brings “The Office” to Peacock next month, it could be a major test of whether users are willing to pay for the ad-supported streaming service.

The company is considering putting most seasons of the sitcom behind a paywall, according to people familiar with the matter, a bet that the move will increase subscriber revenue. The comedy series about office workers in Scranton, Pennsylvania, ended in 2013, but the reruns are among the most-popular shows on Netflix.

All nine seasons of “The Office” will leave Netflix on Jan. 1 and go to Peacock. NBC executives have been touting the show’s arrival as a key moment for their streaming service, after agreeing to pay $100 million a year for the rights. While NBC, a division of Comcast Corp., is still weighing how to market the series, the company plans a big push early next year to promote its arrival, said the people, who asked not to be identified because the details aren’t yet public.

Under one scenario being discussed, NBC would release some early episodes on the free tier of Peacock so people can sample the show, but keep most of the series exclusive to a paid version, one of the people said.

Peacock, which launched nationwide in July, stands out from other streaming services because it’s free and supported mostly by advertising. Consumers can also purchase a $4.99-a-month plan, with more movies, shows and live sports, and a $9.99 subscription with the added content and no commercials.

Internal Debate

NBCUniversal executives are counting on the popularity of “The Office” to boost Peacock’s viewership. During the week of Nov. 9, it was the second-most-watched show on Netflix, behind only “The Queen’s Gambit,” according to data from researcher Nielsen. The show is also currently airing on other companies’ cable stations, like Comedy Central, under separate agreements.

NBCUniversal executives have debated for months over the best strategy for releasing “The Office,” one of the people said. Making all episodes available on the free version could boost sign-ups, which have grown to about 26 million. But holding back most episodes for the premium version would generate subscription revenue and possibly keep some customers from canceling their TV and internet services, a big business for NBCUniversal’s owner.

That’s because many Comcast and Cox Communications Inc. subscribers already get the $4.99 version of Peacock at no extra cost. Giving those customers access to the full library of “The Office” could keep them from cutting the cord, said Rich Greenfield, an analyst at LightShed Partners LLC.

“They’re protecting the pay-TV universe that Peacock is tied to,” Greenfield said. “It’s added value for being a Comcast or Cox subscriber.”

Some fans of “The Office” could also choose to pay $9.99 a month for the ad-free version of Peacock and be able to binge shows without commercials, like they do on Netflix, Greenfield said.

“When you move a show from ad-free to an ad-based environment, what happens to consumption?” Greenfield said. “It will be a really great test.”