NEWPORT, RI – While the rest of the industry frets about the addition of more than 3million Netflix subscriptions in the second quarter, Comcast senior executive vice president David Cohen said the streaming service has actually helped drive two of cable’s most profitable business lines – broadband and content licensing.
“Netflix is the ultimate frenemy,” Cohen said at a panel session at the New England Cable & Telecommunications Association annual conference here. Cohen added while some fear that more Netflix customers means less cable customers, he reminded the audience that reliable broadband is a crucial element of the streaming service.
“Remember, you can’t get Netflix without broadband service,” Cohen said. “Those are 3 million customers of our broadband service.”
He added that Netflix also has contributed to the content side of the business, providing another significant stream of revenue for library content for both television series and films.
While Cohen sees Netflix as a complement to Comcast’s cable offering, he acknowledges that streaming services, especially those that offer slimmer video packages like Sling TV and Sony PlayStation Vue, could potentially be more attractive to price-conscious consumers.
“Part of this is a self-inflicted wound,” Cohen said. “We have made video too expensive.”
Harron Communications chairman and CEO Jim Bruder said that for most operators, sports and retransmission consent fees are their biggest costs. Being able to offer slimmer bundles, especially minus sports channels, could allow operators to offer less channels at lower prices and still maintain healthy profit margins.
Although other companies, including Comcast, have experimented with smaller bundles, Cohen said that taking the concept to the extreme could result in a loss of diverse programming.
“Name a diverse network you think will survive?” Cohen asked, adding services like Sling TV and PlayStation Vue have no diverse networks in their lineups.
“Ethnically diverse and politically diverse programming is all but eradicated in a slimmed-down bundle world."
Cohen added that a better solution could be for networks, especially regional sports networks, to allow distributors to offer channels to 75% to 80% of their customers rather than 100%. That, he said would go a long way toward easing the pressure on price-sensitive customers while still maintaining the programming business model.
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