Welcome back to What I’m Hearing+, live from Brooklyn where the only thing more striking than cobblestone streets blanketed in snow is how quickly that snow disappears.

Tonight, the data behind the surprising rise of NBCUniversal’s Peacock, which was a punchline upon its tepid launch in July 2020. These days, the service is demonstrating signs of life: Could an American remake of a British series, high-impact sporting events, and a strong slate of movies turn the AVOD pioneer into a true contender? And how might all this impact deal talks with Paramount+?

But first…

• Disney+ finally beat Netflix: Parents, rejoice. The most popular series in the U.S. is Bluey, an animated Australian show distributed by the BBC and Disney+, which sits atop the Nielsen streaming charts this week with more than 1.5 billion minutes streamed, an increase of 500 million minutes from when the first part of Bluey’s third season debuted in August 2022. It has also officially surpassed the Netflix-distributed CoComelon as the most streamed children’s show in the U.S.

  This is a big deal: In recent years, Disney has lost market share with preschool audiences, a slip that former C.E.O. Bob Chapek spoke about during an earnings call (where you don’t particularly want to note you’re losing in anything). As YouTube and Netflix grow their presence among young audiences, Disney now has to catch up to the disruptors.

  Bluey is now one of Disney’s strongest plays to help turn Disney+ (and the combined Hulu service) into the go-to family streamer. The question is whether Disney can leverage this growth to target where kids are headed, not where they are (YouTube). There’s already a Bluey read-along series coming to YouTube, for instance, but the real balancing act is figuring out how to increase the total addressable market of a series without losing the exclusivity factor and subscription value of a Disney+ purchase.

• John Oliver’s YouTube shift: Speaking of YouTube, Warner Bros. Discovery and HBO have strategically delayed uploading new segments from Last Week Tonight to YouTube to drive more subscribers to Max. It may work—but I have a feeling it won’t. And based on host John Oliver’s recent tweet expressing consternation with the decision, he isn’t so sure, either.

  Here’s the main issue: Customers who wanted both Oliver’s show and the Max catalog in one package have likely already signed up for Max. But those watching Last Week Tonight segments religiously on YouTube (where the audience is younger) aren’t necessarily interested in paying for a service. Is Oliver worth an additional $15 a month, or is it easier to just wait three more days? My assumption is that most of the YouTube audience won’t upgrade for one talent they can literally “wait and see.” They’d probably rather watch only his most viral content in algorithmically recommended clip form, anyway.

First, the streamer should lean harder into Bravo, with its young, female-skewing superfans and plethora of addictive franchises. Second, NBCU should position Peacock as a national and local hub for live sports, given both NBC’s various contracts with pro sports leagues and Comcast’s own local affiliate deals. Third, and perhaps most important, I made a somewhat unpleasant suggestion: I gently told a room filled with creative executives to stop throwing money at flashy original concepts.

I obviously won’t pretend in any way to take credit for Peacock’s recent successes, but the business unit has improved in the past year by focusing on unscripted programming, lower-cost originals, sports, and a well-considered film strategy. Peacock accounted for 1.6 percent of all streaming viewership in the U.S. in January—a 23 percent jump from the previous month, per Nielsen Gauge—in large part due to the exclusive NFL wild card game, which drew 23 million viewers, but also movies like Five Nights at Freddy’s and series like Seth MacFarlane’s Ted and reality competition The Traitors. This past week, those series both appeared on Nielsen’s streaming originals chart, the first time Peacock has had two shows in the Top 10 simultaneously. Meanwhile, Oppenheimer is now streaming exclusively on the platform. Next up is the 2024 Paris Olympics, always a boon for NBCU (though let’s see if those subscribers stick around…).

Peacock, long maligned as Comcast’s half-hearted entrant into the late-stage streaming wars, appears to be turning a corner. Last month, the service reported a 57 percent increase in year-over-year revenue in Q4, topping $1 billion in revenue for the first time. Peacock also added 3 million subscribers last quarter, for a total of 31 million. On the earnings call, Comcast president Mike Cavanagh called Peacock “the fastest-growing streamer in the U.S.,” a reference to its subscriber increases, sure, but also an inadvertent acknowledgement of its flourishing advertising business. It’s hardly a surprise that Peacock is reportedly attracting strategic partnership interest from Paramount Global, which is looking for solutions (and revenue) for its own service, Paramount+. Peacock has yet to prove exactly why it needs to exist, but it’s gotten closer to an answer by relentlessly focusing on who the service is for.

Peacock’s only real innovative thinking pertained to the ad market. Unlike rivals, which seemed to view an ad-free environment as part of the value proposition of streaming, NBCU didn’t deprive itself of a core competency. At the time, some viewed Peacock’s insistence on supplemental revenue as a sign that it was insecure about its content. But this simple decision turned out to be brilliant, since the average revenue per subscriber is actually higher when ads are served. (Also, as Netflix is learning via its new ad tier, building a commercial business is as challenging as teaching consumers a new behavior.)

To wit: Among streamers, Peacock boasted the largest share of new customers choosing an ad-supported tier between May and November 2023, according to Antenna. While 49 percent of customers still chose ad-free plans across most SVOD services, Peacock drove 15 percent of total ad-supported sign-ups, followed by Hulu—which helped architect the AVOD business—at 14 percent. Netflix didn’t crack 5 percent. As of November, Peacock also has the largest portion of ad-supported customers, at more than 70 percent.

Notably, November was the first month that Antenna recorded the majority of streaming customers across all major platforms—51 percent—chose an ad tier over ad-free. Comcast C.E.O. Brian Roberts touted that the company’s overall advertising revenue rose 2.4 percent in the most recent quarter, an astonishing figure in this tough environment, in large part because of gains at Peacock. After all, between 3Q22 and 3Q23, Peacock often saw its subscribers grow by double-digit percentages.

In a sea of nothing TV brands, Bravo still means something, and it is a critical component of Peacock. Of course, as a linear network, Bravo isn’t without its troubles. The average linear audience for its shows declined roughly 40 percent between 2016 and 2023, according to Statista, only slightly worse than the decline of cable viewership more broadly. But the success of The Traitors, a competition show that brings together reality stars from Bravo series like Real Housewives and others, suggests there’s an opportunity for that brand and its cheap, replicable formats on streaming. I was joking about the cinematic universe, but as with all humor, it was grounded in truth! Recurring characters making reality show wages is a solid business model.

Obviously, Bravo content isn’t enough to make Peacock a survivor in the age of consolidation, which will likely winnow things down to three or four services. For that, Peacock also needs more content. One answer might be a bundled product, such as SkyShowtime, the combined Peacock and Par+ streaming service that exists in parts of Europe (mostly the Nordics), the very existence of which explains Paramount and NBCU’s reported discussions about a merged product in the U.S. And not just because of the increased scale—having a ton of content just to have a ton of content is a poor strategy—but because so many of their assets are complementary.

A combined streamer, after all, would maintain a large NFL presence (and provide a nice counterpoint to the Spulu bundle, which includes Fox, Turner, and ESPN). It would also pair kids’ content (Nickelodeon) with reality (Bravo, MTV) and a sea of procedurals that audiences still watch on broadcast. The other dirty secret of TV ratings is that while cable viewership is down, broadcast is up. Viewership among people ages 25 and 34 increased by nearly 50 percent in September month to month, according to Nielsen, with a similar jump in January. It’s a notable accomplishment, even if the return of college football and the NFL is mostly responsible.

A combined Peacock and Par+ wouldn’t compete with Netflix, of course, but it could create a second-tier must-have service for Americans. There’s also a nice balance to the combination: Peacock reaches a younger audience, while Par+ is slightly more female-skewing. Also, Peacock’s ad-supported customer base would love Par+’s library of sports and procedurals.

NBCU, to its credit, is pivoting. At launch in 2020, its streaming operation set out to do what Netflix and HBO were already doing better. But after burning through a few billion dollars, Peacock is now doubling down on its core competencies. It should keep pushing in that direction. In the meantime, Roberts now has a real opportunity (and presumably on favorable terms) to forge a content partnership with Paramount to deliver something that nobody else is offering: a cable-on-streaming strategy at a cost-sensitive price point.

For Paramount, whose share price has cratered lately, this is a necessity. And yet it may be for Peacock, too. Despite its improved financials, Peacock lost close to $1 billion in operating income last quarter. That’s an improvement from the same period in 2022, but not quite in the same league as rivals like Disney, which pared losses to just $138 million, or Warner Discovery, which went from negative $634 million in adjusted EBITDA to positive $111 million. (Netflix, meanwhile, is living in an entirely different stratosphere, with Q4 revenue of $8.8 billion and nearly $1 billion in pure profit.)

A refined investment strategy and potential synergies with Par+ should improve that math. Indeed, Peacock spent the first few years of its existence trying to discover its identity. Now, Roberts and Cavanagh can turn it into an actual business.