One of the biggest threats to Comcast’s business is the cord-cutting phenomenon. To stem this practice Comcast recently announced a deal for customers located in Oregon, Houston as well as Southwest Washington which would see increases in internet speeds for customers who will subscribe to a package that features cable television service and internet. That deal therefore specifically rules out cord cutters. Regardless of whether the deal will work to halt cord-cutting, it is quite tempting as the internet speeds will be more than doubled in some cases. For instances customers whose internet speeds are 60 Mbps will see their speeds rise to 150 Mbps.
What seems to have informed Comcast’s reasoning with regards to this deal is the fact that the services that cord cutters are turning to such as PlayStation Vue, YouTube TV, DirecTV Now and Sling all require an internet connection in order to stream video content. Comcast is thus hoping that with faster internet speeds which are offered only to those who subscribe to its pay-TV the churn on the cable business will subside.
Numbers don’t lie
Already Comcast is already feeling the pinch of cord-cutting. Comcast’s most recent earnings report showed that video revenue declined by 0.8% after losing 96,000 residential customers. In 2017 the total number of video subscribers that Comcast lost was 151,000.
Another strategy Comcast has recently employed with a view to preventing cord-cutting was announced mid last month. This strategy involves including the leading online video streaming service Netflix in its cable bundles. Prior to this move by Comcast Netflix had never been included in the bundle of a major television provider bundle in the United States. This also came as a surprise due to the fact that Comcast and other cable firms have long been against the cord-cutting impact of Netflix and other online video streaming services.
Digital future is here
More than a decade ago the chief executive officer of Comcast, Brian Roberts, had outlined a vision for accelerating a digital future by acquiring entertainment and media giant Walt Disney at a price of $54 billion which was a premium of 22% at the time. The digital future has since then arrived and it looks like content will decide the winner.
With this in mind late last month Comcast placed a bid of $31 billion for European TV firm Sky despite the fact that Sky had already consented to allowing Fox to acquiring the stake it doesn’t already possess. Currently Fox owns a 39% stake in Sky. Coming just months after Disney had agreed to acquire some of Fox’s entertainment assets, this could be an indication that Comcast sees Disney as a big threat in the future especially since it is widely understood that the reason the house of mouse is acquiring Fox assets is to bolster its content portfolio as it prepares to launch a streaming service to rival Netflix.
Indeed it is now expected that Comcast will also launch a bid for the same Fox assets that Disney had consented to acquiring. Though Comcast might not succeed in this effort it could at least make sure that Disney pays a higher price than had originally been intended!