Comcast's Xfinity Flex product, launched in 2019 to attract broadband-only customers to on-demand and SVOD video offerings, may have missed its biggest opportunity by being late to the streaming game, but could still more than double its subscriber base by 2025, according to Bernstein media analyst Peter Supino.
In a research note, Supino estimated that Flex, which is available to Comcast broadband-only customers at no extra cost and offers more than 10,000 free movies and shows, access to apps like Netflix, Disney Plus, Amazon Prime and Hulu, as well as on-demand pay-per view content, has about 1.9 million active monthly users. That base could have been four times that amount if it had launched earlier in the streaming cycle, Supino estimated, but the analyst still believes the service could grow to about 5.6 million monthly active users over the next four years.
“Had Comcast been early with Flex, we think it would presently serve 6-8 million homes rather than its current [less than] 2 million monthly active users,” Supino wrote, adding that while the service is competitive, it’s not superior to other services. “However, Flex should continue to gain market share, however quietly, by targeting cancelling Xfinity video subscribers who keep Xfinity Internet service, as well as the minority of new Internet subscribers who have neither an SMD nor a recent vintage smart TV.”
Supino predicts that the shift toward streaming video will continue over the next few years, with streaming media devices (SMDs) from Roku, Amazon, Google and Apple, connected TVs and smart TVs dominating the distribution sector.
In his note, Supino estimated that of an estimated 117 million internet households in 2025, 100 million will be connected via SMDs or connected TVs. The rest, he wrote, will access entertainment via tablets, laptops and smartphones.
Those 17 million households, coupled with an estimated 10% of existing broadband households (about 10 million homes) that may experiment with a new service and 4 million non-broadband, non-TV households in the footprint gives Flex a potential pool of about 31 million customers to mine. Taking into consideration Comcast’s existing broadband market share of about 24.2% and assuming 50% usage/uptake rate, Flex could add about 3.7 million customers at the low-end, and 4.8 million additions on the high end.
“With the ~3.7M potential net adds, Comcast can expect to have ~5.6M users by 2025,” Supino wrote, adding that with an estimated ARPU of about $45, Flex could earn annual revenue of around $250 million by 2025.
Supino also believes that Flex can help Comcast’s Peacock streaming service as a promotional tool.
“The cost of promotion on Flex should be vastly lower than in third party environments in which Peacock competes with larger streaming players for sign-ups and engagement,” he wrote. “For example, we believe that Roku gained a 10% share of Peacock's advertising inventory in the companies' 2020 carriage negotiation.”
