NOTE: this blog post is related to a Coursera #MOOC assignment and should be considered to a part of that particular program's requirements and context.
The End of the Cord for Comcast?
While cord-cutting has gotten a lot of media attention, it actually hasn't hurt the bottom line of traditional cable providers such as Comcast. And, it probably won’t for the foreseeable future.
What is Cord Cutting?
According to Technopedia, cord cutting “refers to the process of cutting expensive pay-television services (e.g., cable connection services) in order to change to a low-cost TV channel subscription through over-the-air (OT) free broadcast through antenna, or over-the-top (OTT) broadcast over the Internet. Cord cutting is a growing trend that is adversely affecting the cable industry.” Netflix, Apple TV and Hulu are some of the popular broadcasting services that encourage cord cutting. The cord cutting concept received a considerable amount of recognition starting as early as 2010 as more Internet solutions became available. These new media broadcasters have convinced millions of cable and satellite subscribers to cut their cords and change to video streaming.
In fact, in 2018, the major pay-television companies lost about 2.5 million television customers according to research analysts at the investment banking company XYZ. Global media research & consulting firm ABC is suggesting that it could be time for traditional pay TV services to grab a lifejacket, “as the first quarter of 2019 brought about the largest number of cord-cutters yet.”
Here's What's Happening Now in the Industry
Currently, in most situations, consumers who eliminate pay-TV subscription are not giving up on television entirely. They're just swapping from traditional cable to the new media or streaming services. That means they not only require broadband service, but they probably also desire the highest quality broadband possible.
Occasionally there's no alternative, since approximately half of Americans reside in geographies served by only one broadband provider. For those who live in a market with multiple providers, the choice has largely been to select the faster, higher-quality service provided by cable companies compared with alternative connection types available via telephone company providers (e.g., AT&T) or satellite suppliers (e.g., DISH network)
The telephone providers are losing immense amounts of internet customers, meaning that existing their subscribers aren't switching from pay-TV to internet connection services. According to company annual reports, AT&T lost 18,000 internet customers in 2018 while Verizon gained just 2,000. The larger Internet broadband losers – which most likely saw their customers switch to Comcast, Charter and other cable providers – were CenturyLink (down 262,000) and Frontier (down 203,000) according to analysts of the AAA Research Group.
Here's What's Happening Now to Comcast
Similar to the other cable operators, Comcast continues to gradually lose its cable-TV customers to the less expensive, more flexible new media streaming alternatives. Indeed, Comcast recently saw its biggest ever annual loss of such subscribers in history, with Comcast losing 120,000 subscribers during the third quarter alone according to analysis from CRFA research.
Realizing it must take action to deal with the continued success of the new media streaming competitive threat, Comcast has responded by adding Netflix to its own cable boxes in the hope it will keep its existing customers from eliminating their services. And, recently, Comcast indicated that the company launched a new streaming device for its Internet customers that enables its users to view not only Comcast's cable TV content, but also that of some competitors. Once more, the aspiration is that by expanding the set of options, it customers will resist the new and emerging options.
Here's What's Might Happen to Comcast in the Future
Looking to the future, Comcast does have a variety of options that could prove compelling. First, as described above there is limited competition in certain markets in terms of both cable and broadband Internet options. Second, when it comes to subscription services, many consumers still are avoiding the hassle of making cutting the cord because of inertia. And, third, the advent of 5G wireless technology. 5G will usher in a number of new technologies including smart cities, augmented and virtual reality and autonomous vehicles, all of which present new revenue streams for network operators. And, since 5G network deployments will require substantial investments in new antennas, stronger data backhaul infrastructure and network cores to facilitate growing data traffic and an increase in the number of connected devices, Comcast has the financial resources whereas most other new media firms certainly do not. It will be interesting to see how the “cord-cutting” phenomenon unfolds in the future for both consumers and Comcast.
@RayBordogna opines on "strategy" concepts.