With its failed Time Warner Cable merger now in the rear-view mirror, Comcast turned in a solid second quarter marked by video-subscriber improvements that indicate cable might be on a path to return growth to the category.
Comcast lost 69,000 video subscribers in the period, a 52% improvement from its year-ago video losses — and better than analyst expectations that it would lose 109,000 in a tough period known for “seasonality” as snowbirds and students make their summer moves.
The quarter also marked the first time that Comcast’s total broadband subcribers (22.54 million) leapt past total video subscriebrs (22.3 million).
Comcast’s improved video results — its best second quarter in nine years — are in contrast to weaker video results at AT&T and Verizon Communications. AT&T lost 22,000 U-verse video subs, while Verizon saw FiOS TV subscriber growth shrink to 26,000, down from 100,000 in the year-ago quarter. Some top analysts wondered if this means cable is about to turn the tables on its telco TV competition.
“Comcast’s results speak at least to market share — the pendulum is swinging back in cable’s favor — and perhaps even to cord-cutting and cord-nevering fears,” MoffettNathanson principal and senior analyst Craig Moffett said in a research note. Second-quarter results “suggest improved flow share” for cable and satellite in the quarter, noted Morgan Stanley analyst Ben Swinburne, pointing out that he had expected AT&T to add 45,000 U-verse video subs in the period.
Comcast pinned video improvements on its amped up customer-service efforts and its accelerating rollout of X1, the MSO’s next-genedration IP-capable video platform. The operator is now shipping about 30,000 X1 boxes per day, up from the 15,000 to 20,000 it had been sending out.
X1: A ‘GAME-CHANGER’
“We’re pushing to be even faster” Comcast CEO and chairman Brian Roberts said on last Thursday’s earnings call, labeling X1 as “absolutely a game-changer” for the cable operator.
Comcast said X1 is showing a 30% reduction in voluntary churn alongside increased use of video-on-demand and additional outlets.
XI’s IP underpinnings are also opening the door to different market segments. Stream, Comcast’s coming mobile-only TV service, will ride the company’s managed IP platform to deliver video to mobile devices in the home.
In addition to appealing to millennials, Comcast believes Stream, which will offer major broadcast TV channels, VOD and access to a cloud DVR, will help it keep customers on a video product while also providing an upgrade path to bigger bundles.
Comcast is also being realistic about its potential market impact. “It’s not something you’re going to see meaningful results from in the near future,” Roberts said.
But there are indications that Comcast is looking for other ways to connect with younger consumers. The Wall Street Journal reported last week that NBCUniversal is in preliminary talks about taking stakes in online media companies including Vice Media, BuzzFeed and Business Insider.
NBCU declined to comment on the rumor, but the paper said an equity stake in Vice could lead the way to a Vice channel or see Vice snap up one of NBCU’s cable networks. Vice, meanwhile, has a deal to offer content on a “mobile-first” OTT video service from Verizon slated for a late summer launch.
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