|As of Q3 2019||Residential + Business Subscribers||Change over Q3 '18|
Commentary on Q3 2019 results
Comcast’s new triple-play broadband bundle
As cable TV and voice services continue their long-term decline, Comcast has formed a new triple-play bundle anchored by broadband. Will it be as successful as the traditional triple-play bundle?
Broadband one bright spot in cable services
Video customers continue to decline at Comcast. They fell another 238,000 in Q3 2019, an acceleration from the 106,000 loss in Q3 2018. Comcast management does not seem perturbed by the continued decline. It made the strategic decision to allow lower-paying customers to churn out of the service late last year. On one level, the strategy seems to be working. Video ARPU increased to $86.3, up $1.6 over Q3 2018. That said, the approach can only be successful if subscriber losses begin to slow at some point, and, for now, they are accelerating.
Voice services also continue to decline, along with the whole wireline voice industry. Comcast has lost 170,000 subscribers since Q3 2018 and now has 11.3 million customers.
Broadband, on the other hand, continues with strong growth. The company added 379,000 new customers to reach 28.2 million, a 5% increase over Q3 2019.
Traditional bundles losing their appeal
Classic triple and double-play subscribers continue to decline. In the third quarter of 2016, 70.7% of Comcast cable customers had two or more services. 29.3% had just one product. Since then, the number of single-play customers has steadily increased while the number of customers with more than one service has declined. In the quarter just ended, the proportion of Comcast’s customers with one service has increased over 5% to 34.4%, with multi-play customers falling to 65.6%. The most significant decline has been in the number taking three or more services.
Pinning the future on broadband, Flex, and Xfinity mobile
Comcast is moving to address the shift from traditional pay TV and phone service toward broadband-only customers. Xfinity broadband customers can also sign up for Xfinity Flex and Xfinity mobile. While not an official bundled product, both Flex and Xfinity mobile require a customer to have Xfinity broadband.
Flex is available for free to broadband customers. They receive a streaming media player which has a selection of Comcast-curated SVOD, AVOD, and audio services, including Netflix, Amazon Prime Video, Pluto TV, and iHeartRadio. It also includes a voice remote leveraging Comcast’s voice control and discovery technology. Flex is built on the Xfinity X1 platform.
Since its introduction in 2017, Xfinity mobile has been growing well. In Q3 2019, the company added 204,000 lines to reach 1,791. Xfinity mobile provides two plans. One plan includes unlimited data, calling, and texts for $45 a month. The other plan starts at $12 a month with unlimited calling and texts and 1 GB of data.
Will the broadband triple-play bundle be a success?
It is very early days for this new approach to a triple-play bundle. However, it is fair to say each service in the package has challenges.
There are big questions as to whether consumers want Flex since it only provides access to a small subset of SVOD services. Moreover, Xfinity mobile is restricted to the 27 million Xfinity broadband subscribers and is battling in a very crowded wireless market. Finally, Xfinity broadband could soon be under pressure from new 5G powered broadband in many of its primary markets.
However, getting a broadband customer to use even a zero-revenue product like Xfinity Flex could be a win for Comcast. In the past, operators like Comcast have found that customers that take more than one product are much less likely to churn. That said, Flex and mobile service don’t have nearly as much stickiness as their wireline predecessors. It could be that this broadband triple-play bundle isn’t sticky at all!
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Why it matters
Comcast Q3 2019 results show pay TV and voice services are in long-term decline, undermining the power of double and triple play bundles.
Comcast has a new triple-play based on broadband, with a mobile and online service aggregation play.
The broadband triple-play may not deliver the same benefits as the company’s traditional bundles.
Tables and graphs on this page are derived from public Comcast quarterly earnings statements and from the analysis and calculations of nScreenMedia
|For Q3 2019||Revenue||Change (over Q3 '18)|
|Annual Total||$109.5B 2018||+6.4% over 2017|