Company / division: Comcast
NBCU to Shut Down Seeso Comedy Subscription Service (Aug 9, 2017)
Snapchat Launches Daily NBC News Show (Jul 19, 2017)
Netflix and HBO Lead Emmy Nominations (Jul 13, 2017)
TV Networks Score Growth in Upfront Ad Commitments (Jul 13, 2017)
Netflix Squeezes Fox Out of Top 4 Must-Keep Viewing Options (Jul 12, 2017)
Back in March, there were reports that AMC was looking to provide an ad-free version of its TV network through pay TV operators, though the specifics weren’t then known. Today, AMC and Comcast have announced that the service will run (for now at least) as a partnership between them, providing AMC Premiere as a video on demand service through Comcast’s set top boxes and apps for $5 per month. As I said in March, that’s a hefty price for a network which commands just a fraction of that from pay TV operators each month, and which generates only half its current revenue from advertising. It may have decided that pricing a service below $5 per month devalues it, but the $5 price point clearly overvalues it, especially given that it won’t be a standalone service – in other words, you have to be an Xfinity pay TV subscriber to be able to get the service, so this is an add-on to the standard AMC channel, not an alternative to it. Taking a step back, the move clearly taps into a broad consumer push to get ad-free TV, something which Netflix has always offered and Hulu has made something of a default recently too for VoD. And of course competitors like HBO have never had ads either, but they also have massively more content including lots of big-budget original content to justify a higher price. This feels like a good concept in principle, but both the wrong channel to apply it to and the wrong price point for what AMC actually offers. I’m looking forward to better applications of the same idea from other content owners.
NBCU has announced a new subscription offering for watching England’s Premier League soccer games, which will cost $50 per season when it launches in August this year. The catch is that these games were previously available online and through NBC’s apps to authenticated pay TV subscribers as an additional offering over and above the games shown on its live linear TV channels. So it is taking what used to be a perk for authenticated pay TV subs and making it a separate, $50 service, making this a bid for new revenue from dedicated soccer watchers. What that means in practice is that viewers who care about this will now need to subscribe to TV packages that include the NBCU channels and to this separate subscription if they want to watch all possible games. This is definitely part of a trend towards direct-to-consumer offerings, many of which are coming from traditional players not willing to offer full cord-cutting solutions, which means that they actually end up setting the user experience back instead of moving it forward, as in this case. The traditional TV players continue to be more interested in experimenting and dabbling with services that can provide new revenue than – to use an analogy from a different sport – skating to where the puck will be by offering truly new offerings that allow users more control. I continue to believe that there will come a tipping point when we see real innovation in giving users just what they want because the alternative is rapid decline, but we’re clearly not there yet. But it’s also notable that both Fox (through the deal announced earlier today with Facebook) and NBCU are seeking new ways to monetize their second-tier sports content which otherwise doesn’t appear on TV.
More Fraudulent Comments Submitted to FCC on Net Neutrality (May 29, 2017)
I had an earlier comment on a report that many fraudulent comments had been submitted to the FCC over its proposed net neutrality action, though the vast majority of those were against the policy proposals. Now, it’s emerged that there have also been some number of identical comments submitted in support of the proposals, at least some of which are being submitted in the names of individuals who have publicly opposed them. Those individuals have quite reasonably asked that those fraudulent comments be removed from the site, and also that the FCC investigate the fraud (something which, as far as I am aware, the FCC isn’t planning to do with the earlier comments either). There’s also an accusation – completely unsubstantiated as far as I can tell – that Comcast is somehow behind these comments. This FCC process has been dogged from the start by “astroturfing” – the process of either faking or at least dramatically magnifying apparent public comments on a controversial topic, through a combination of legitimate streamlining methods like form letters and online submission forms and illegitimate ones like these fake comments. That, in turn, seriously muddies the water in terms of what real people actually believe about all this – the only survey I’ve seen on this was sponsored by the industry and predictably showed that people broadly oppose regulation on the Internet but without being very specific about net neutrality. As I’ve said from the start, though, this FCC doesn’t seem particularly likely to bend even in the fact of significant (real) public opposition.
via Ars Technica
I’ve been watching the news from the recent TV upfronts and waiting for the definitive article that summarizes what’s been said and done, and while I’m not convinced this is it, it does a good job of characterizing the basic trends at issue. The two big underlying trends are the continuing decline of live linear viewing of traditional TV and the massive growth of online advertising, which could be presumed to have put an enormous dent in TV ad spending but actually haven’t. However, the TV companies still see online advertising platforms as a big threat, and spent an unusual amount of time during the upfronts trashing Facebook and Google (though mostly not by name) while talking up their own massive reach. At the same time, though, these companies are increasingly mimicking the very same things that make Facebook and Google’s ad platforms attractive: detailed targeting of ads and tracking of what happens after viewers see them. At the same time, the TV networks seem somewhat lost on the content side, rebooting old shows and formats, latching onto new gimmicks like live musicals, and generally showing a lack of imagination in protecting and rejuvenating their brands. Meanwhile, the strongest audiences on traditional TV are live sports fans and older generations watching procedural franchises like CSI and NCIS. And of course the big online platforms are investing in lots of both traditional sports content and some new formats of their own. Therefore, though each side would like to paint itself as providing unique value, the two are increasing converging on a similar set of content and ad capabilities, while the audience continues to shift from traditional linear TV to a host of online and streaming alternatives, which will inevitably pull ad dollars that way too.
via LA Times
Comcast reported Q1 2017 results this morning, and in keeping with past trends, the numbers were generally good. It saw another rise in TV subscribers as the cable companies continue to take share from the telcos, despite the overall trend of cord cutting, and it also saw strong growth in broadband subscribers, which now significantly outnumber its TV subs. Interestingly, it also began placing more emphasis on its home automation and security business this quarter, and reported that it has almost a million subscribers, or around 4% of its broadband base. The big theme that’s emerging from this quarter’s earnings reports from these providers is bundling – Comcast continues to see the percentage of customers taking more than one product rise over time (it’s now reached 71%), while AT&T suffered precisely because it can’t offer broadband/TV bundles to DirecTV customers. The wireless-TV bundles it can offer aren’t the ones consumers are looking for, which makes Comcast’s push into wireless somewhat questionable too. At NBCU, we’re seeing many of the same trends we’ve seen before too – subscriber numbers and viewing are down, but contractual rate increases with MVPDs are driving revenue growth anyway (of course those rate increases are rising costs on the cable side). Ad revenue was down in the cable networks business but up slightly in the broadcast business despite lower ratings because prices have been rising, though my analysis across the TV industry suggests the rate of price increases is slowing dramatically. Comcast continues to be a powerhouse across the categories where it competes (which also includes movies through Universal) but it’s facing some significant headwinds in the form of cord cutting, ratings declines, and rising content costs, which are going to take an increasing toll over the long term.
Note: you can see all my earnings posts or all Q1 2017 earnings posts specifically by clicking on the relevant tags below.
NBC Lines Up Affiliates for Streaming Distribution Deals (Apr 13, 2017)
The FCC recently held an auction of spectrum to be freed up by broadcasters and made available for wireless services, in the 600MHz band, which is well suited to long-distance and in-building coverage. T-Mobile was the only wireless carrier among the big winners, with the two largest carriers having cleaned up in the previous auction, and a cash-constrained Sprint sitting this one out too (AT&T did win licenses worth $900 million, but T-Mobile spent $8 billion). The other big bidders were DISH, which spent nearly as much as T-Mobile ($6.2 billion), and Comcast, which recently announced its wireless service based on Verizon’s network but could eventually launch its own network. Though T-Mobile has always crowed about how much spectrum it has per customer, that was always more of a reflection of its smaller number of customers rather than a massive spectrum trove, and it lacked low-band spectrum. It has now made big strides in solving that problem, and plans to put at least some of that spectrum to work right away (though much of it will be unavailable for several years while the broadcasters go through the process of vacating it, with much of that unavailable spectrum covering the densest markets). It’s also worth noting that no phones in the US today support the 600MHz band – that support is likely to come early next year with a new Qualcomm modem, so even if T-Mobile does put a third or so of its new spectrum to work this year, it won’t do anyone any good until then. So, if you’re a US wireless customer today, none of this makes any difference for now, and it’ll only make much of a difference a year or several down the line if you’re a T-Mobile customer (or in limited cases an AT&T customer). Or as and when Comcast and DISH decide to put that spectrum to use.
Comcast invests in Plume, a Wi-Fi wall plug startup – Axios (Apr 11, 2017)
This is an interesting investment for Comcast, which already has a big focus on WiFi, as evidenced by its Xfinity Mobile launch last week. Its home broadband routers double as WiFi hotspots for other Comcast customers, and it’s been investing in home automation technology too. So investing in Plume, which offers a service-based approach to WiFi, is a logical next step. Smart home systems are increasingly going to require management and control over the WiFi and other networks in the home for quality and security purposes, so going deeper into WiFi technology and management is going to be important for companies like Comcast that want a role there. The other intriguing part of this is that Plume has been working on a model where it would charge a monthly fee for that WiFi management service, something I could see Comcast doing in time either separately or as part of a smart home service. Yet more evidence, though, that the future mainstream version of the smart home is likely to be service-based. (Incidentally, read this smart piece by Stacey Higginbotham for more on Plume)
I wrote a piece last week for Techpinions about the fragmentation in the TV market as everyone launches their own streaming services, and here comes yet another example of that. It sounds like Comcast is working on a service that would combine content from NBC and the NBCU cable networks into a single subscription package, although the conditions on the Comcast-NBCU merger make it unlikely that it will debut in the next 18 months or so. But we’ve already seen the premium cable networks (HBO, Starz, and Showtime) go over-the-top, along with broadcaster CBS and NBC itself with a comedy subscription service called Seeso. As cord cutting and cord shaving eat into cable network subscriber numbers, we’re going to see lots more of this direct-to-consumer stuff. In principle, that sounds great for consumers, who will now be able to pick and choose just the content they want, but in practice they’re likely to end up spending more and dealing with multiple bills, user interfaces, and content models to get it, which is in turn going to lead to an opportunity for re-aggregation down the road.
Comcast Introduces Its Mobile Service (Apr 6, 2017)
Comcast today finally unveiled the wireless service it’s been working on for years off the back of a long-standing agreement to use the Verizon Wireless network as the underlying carrier. It should be a compelling offering for at least some customers, especially the premium 25% or so of its base to whom Comcast will offer preferential pricing. However, the unlimited offering caps out at 20GB per month before throttling kicks in, whereas the traditional carriers’ throttling kicks in at higher points and only in times of congestion, making Comcast’s unlimited in name only. WiFi is a major selling point from Comcast’s perspective, but I’m very skeptical that it’ll be a big part of users’ experience, given how few hotspots Comcast actually has in places where people spend time out of residential neighborhoods, and the fact that WiFi is often now slower rather than faster than LTE. Comcast is going to keep costs down by selling online and in its existing stores and marketing through existing channels, as well as keeping bad debt expense down by marketing to existing customers who pay their bills on time and offering only auto-billing on credit cards. Comcast will likely sell this service to up to 10% of its base in the next couple of years, which will be a nice boost to its revenues and profits, but will make only a tiny dent in the overall US wireless market – 10% penetration of its broadband base would be just 2.5 million customers, which is less than the number of new customers the big four carriers added last quarter alone.