Comcast CEO Brian Roberts still sounds like he has not accepted the reality of today’s video market. Speaking during the investors call last week, Mr. Roberts had this to say about online video:
“I think that we start with the central view that streaming is going to happen, video over the Internet is more friend than foe and we wish every bit was our bit, but if people consume more bits and video clearly does that. And 4K video does even more than that. That’s in the sweet spot of where this company is going to grow.”
The reality is that streaming has happened. More of the homes passed by Comcast’s cable system are Netflix subscribers than are Xfinity X1 TV subscribers. So, it’s time for Comcast to focus on the positive. Here are three very good reasons for Mr. Roberts and his team need to cozy-up to streaming services.
Streaming is the only reason Xfinity broadband is going gangbusters!
Customers continue to sign-up for Comcast’s broadband services. The company added 5% more broadband customers – 1.35 million customers – over the last four quarters. What’s more, the average revenue per unit is growing faster than inflation, up 5% since Q1 2018.
Internet video is the primary reason for the strong growth in the broadband business for Comcast. It helps in two ways. Customers are looking for a broadband service that allows them to stream their favorite services with reliability and fidelity. Xfinity broadband delivers. According to Netflix’ latest speed index, average stream bandwidth delivered to Comcast broadband customers is 4.51 Mbps, second only to Verizon FiOS (4.58 Mbps.)
As viewers adopt UHD streaming, they will need faster broadband. Netflix recommends at least 25 Mbps to watch its UHD content. The need for speed should nudge evermore customers to more expensive tiers of Comcast’s broadband.
Integration with X1 helps keep Xfinity TV customers
Mr. Roberts is proud of the fact that Xfinity TV customers are choosing to watch their streaming services through the X1 set-top box rather than a Roku or Apple TV box:
“In terms of the cable effect for the cable company again we’ve now integrated Amazon, and we’ve integrated Netflix, and we deliver more Amazon and Netflix, I believe, to our customer homes, the number one way to receive it in our footprint and our customer homes.”
Video streamers are looking for ways to simplify their lives. X1 does just that, with a single integrated interface, voice remote, and cross-service search. Comcast says it wants to focus on its more profitable customers. There can be no better way to do that than by ensuring all their video services are neatly woven together in a simple interface.
Protecting the company’s crown jewel: triple play customers
Getting customers to sign up for more services is the best way to ensure they stay longer. Comcast has trumpeted the fact that churn is dramatically lower among its triple play customers. The company made it a strategic imperative to boost the number of triple and double-play customers. However, the move toward streaming services has begun to erode the value of the triple play bundle.
The proportion of Comcast customers with three services peaked in Q1 2016 at 37.6%. The proportion of customers with one service hit a low in Q1 2017 of 29.3%. Since then, single-play customers have been increasing and triple play customers falling. Between Q1 2017 and 2018, the proportion of triple-play customers dipped an alarming 1.3% while single play customers increased by 1.4%.
The integration of streaming services into the X1 experience could be a reason the triple play slide is slowing. Over the last two years, the company has been hard at work integrating Netflix, Amazon Prime Video, CuriosityStream, and many others. It continues to add more. Last week it added Cinedigm’s ConTV and Docurama. Between Q1 2018 and 2019, the decline in the proportion of triple-play customers reduced to 0.5% while the proportion of single player customers increased a more modest 1%.
Why it matters
Worrying about whether streaming video is a friend or foe is pointless since streaming is a fact of life for most TV viewers.
Streaming video can help triple play operators in several ways:
- Boost broadband revenue
- Retain valuable pay TV customers
- Slow the decline in triple-play customers.