Comcast's New Half-Assed Answer To Netflix Is No Answer At All

from the learn-to-compete dept

Mon, Jul 13th 2015 12:45pm — Karl Bode

So far, legacy cable operators have crafted an ingenious, two-pronged response to the rising threat of internet video competition. One, mindlessly raise programming and equipment rental rates (since we all know that traditional cable TV is a cash cow that will live forever). Two, pretend to be innovative. This latter part doesn't have to consist of much; you have to do just enough to make it look like you give a shit about television's evolution, like offer a sloppy Hulu clone under your own brand, or launch a "me too" streaming service with so many caveats to make it largely useless.

That's apparently Comcast's MO with the launch of its new creatively named "Stream" internet video streaming service. According to the company's announcement, Comcast's Stream service will offer users a handful of channels (including HBO) with ads, for $15 a month. The biggest caveats: you can only use the service if you're a Comcast "Xfinity" broadband customer, and you can only use the service while at home on your Comcast Wi-Fi connection. It's yet another cable industry attempt to keep cord-cutters in house by offering them something that looks like innovation, but falls well short of the mark.

Comcast and other cable operators are obsessed with the false belief that you can create such wonderful, amazing walled gardens that traditional cable users will somehow be impervious to obscene pricing and will never want to leave. That's the mindset behind the industry's TV Everywhere initiative, and it's a mindset on proud display here. But when you actually look at the pricing and value proposition on display, it's pretty clear where Comcast still thinks it can steer users:

"Here’s some quick math: Comcast sells Internet at different prices in different markets, but right now a basic broadband-only subscription in its home market of Philadelphia is $67 a month. Add in the cost of Stream and you’re up to $82 a month. But Comcast sells a basic TV + Broadband package, including HBO, for $45 a month. You will want to read the fine print when you compare the two offers.** But you might reasonably conclude that Comcast would still rather sell you cable TV than Web TV."

Gosh, yes, you might just reasonably conclude that. Comcast (like all cable operators) is stuck between a rock and a hard place. If it offers a truly disruptive, well-priced internet streaming service, it will start heavily cannibalizing all of the customers currently paying an arm and a leg for traditional television. The answer? Cable will have to do the unthinkable and begin competing on price, offering traditional cable TV and streaming capabilities and a better bundle price. Yes, the reduction in quarterly revenues is going to make investors and executives cry over their lattes, but it's a smarter play over the long haul than responding to fleeing, cost-conscious customers with the inept one-two punch of yet more rate hikes and the pretense of innovation.

Besides, said executives and investors can then turn around and recoup those losses by socking broadband customers with broadband usage caps and overage fees, right?

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Filed Under: stream, streaming video
Companies: comcast, hbo, netflix

20 Comments

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Anonymous Coward, 13 Jul 2015 @ 1:00pm

So does having commercials over their streaming service mean that cable channels without commercials will now have commercials if you watch their content?
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dave blevins (profile), 13 Jul 2015 @ 1:30pm

cannibalizing customers
It is ALWAYS better to cannibalize your customers than to let someone else do it. Tho I doubt that this is known or believed by the big media executives.
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DannyB (profile), 13 Jul 2015 @ 2:17pm

I want my tv and Internet from DIFFERENT companies
TV content and ISPs should be two different companies. That way each content provider works with all ISPs and your ISP works with all content. Stop the abuses we have already seen with fast lanes those who pay twice; and slow lanes for competing tv content providers.

No ISP should favor a particular content provider. And vice versa.

It keeps competition healthy. Content providers should compete to provide the best content at the best price.

ISPs should compete to deliver the best internet service at the best price -- regardless of what you use your internet for (which is none of their business).
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Unanimous Cow Herd, 13 Jul 2015 @ 2:50pm

Re: cannibalizing customers
Why? Because consumers are delicious.
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John Fenderson (profile), 13 Jul 2015 @ 2:53pm

Re: I want my tv and Internet from DIFFERENT companies
A thousand times this.
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Anonymous Coward, 13 Jul 2015 @ 4:11pm

Did they recently hire someone from Apple?
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Anonymous Coward, 13 Jul 2015 @ 6:11pm

That $45 price point doesn't include taxes and surcharges that Internet only service does not have. That can significant $ to the equation. We were offered a $39 TV/internet pkg at our second home, but after comparing to our primary bill, we went with the Internet only option.
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Anonymous Coward, 13 Jul 2015 @ 7:53pm

And here I am, at the Laundromat, down the street, downloading all my shows for free while reading techdirt. Not because I'm cheap but because I refuse to pay to watch commercials and to browse the web at 80$ a month.

When they go back to their 80s model of doing business (which didnt involve financial rape and brainwashing), I may start paying again...
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s7, 13 Jul 2015 @ 11:43pm

Netflix has hit such a sweet spot with their pricing, and their service. There aren't too many people I know that don't subscribe and rave about it.

The line, "It's on Netflix." is something I hear daily. It's something we can all share no matter what cable company we have, and just about whatever service level we have, DSL/FIOS/Cable, etc.. IT JUST WORKS!
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me@me.net, 14 Jul 2015 @ 3:51am

so its useless
next........
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Ninja (profile), 14 Jul 2015 @ 4:24am

Re: cannibalizing customers
That's one of the things Apple did amazingly right whjen they launched the iPhone completely aware it would eat at their most profitable lines. Indeed, companies should be looking for and actively developing things that make their products obsolete. O risk going Kodak.
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Ninja (profile), 14 Jul 2015 @ 4:27am

Re:
And often if it isn't on Netflix then it doesn't exist. The MAFIAA should take note.

On a side note I was wondering yesterday how I'd pay to watch a movie that's in the cinemas on Netflix in my home for my own comfort and satisfaction. Sadly this offer is non existent and I 1- don't plan to go to the cinema for it and 2- will pirate once the bd comes out if it doesn't debut on Netflix at the same time.

But, but, PIRACY!
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Wickedsmack (profile), 14 Jul 2015 @ 5:26am

My ISP/Cable Provider feels differently
So I am with WOW, and over the years I have come to trust them as they always fixed any problem I had quickly and politely. They have done something that blew me away when I discovered it. With their Ultra TV box (HDD for DVR, Wireless router, portal for the other digital reveivers in the house) they added a Netflix channel. I know right?! A channel...for Netflix!! I can now log into Netflix and gorge myself on content just by turning to channel 1500. I think this is fantanstic.
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Wickedsmack (profile), 14 Jul 2015 @ 5:30am

Re: Re: cannibalizing customers
There is an excellent chance I laughed harder than I should have at this comment!
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Morgan Wick, 14 Jul 2015 @ 7:39am

WHY ARE INVESTORS SO STUPID??? Why are they so easy to hoodwink with the tricks Comcast and others trot out???
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hobo, 14 Jul 2015 @ 8:19am

Re: Re:
Amazon has this feature for some smaller indie films. And Redbox has you covered for physical media at better price than streaming new HD from Amazon for $4-5/day. And those are just the (good, imo) legal options.

Basically, cable is unnecessary.
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Erik, 14 Jul 2015 @ 9:24am

This is a placeholder product until the FCC finishes deal with NPRM 14-261.

Once the transmission path requirement for MVPD goes away this is the product that will allow Comcast to expand their MVPD services beyond the physical footprint of their cable plants.
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nasch (profile), 14 Jul 2015 @ 11:01am

Re:
This is a placeholder product until the FCC finishes deal with NPRM 14-261.

Once the transmission path requirement for MVPD goes away this is the product that will allow Comcast to expand their MVPD services beyond the physical footprint of their cable plants.

Could you explain some of that for people who have no idea what any of that means and are too lazy to look it up? :-)
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Erik, 14 Jul 2015 @ 11:08am

Re: Re:
Right now Comcast’s TV business is limited to the physical footprint of their cable plants (do they have a cable in the street in front of your house). This limits their total addressable market for TV customers to about 28% of US households. Under current FCC regulation the only way they can expand that is to build more cable plants and that is very expensive, in CAPEX, In time to market, and requires lots of political lobbying at a very local level.

Why is Comcast Stream currently limited to operating over Comcast’s pipes? It is so that Comcast will still control the transmission path. Legally Comcast Stream is still a cable company (MVPD in the lingo) for the purposes of program licensing and copyright.

The FCC is in the process of changing the rules that define what a cable company is to no longer require control of the transmission path. When they do this Comcast’s total addressable market for TV services will no longer be limited to their physical footprint. At this point Comcast will no longer require a Comcast ISP subscription for Comcast Stream. What Comcast announced this week is the vehicle that will allow them to sign up TV customers that have TW, AT&T, and other providers as their ISPs.
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nasch (profile), 14 Jul 2015 @ 11:18am

Re: Re: Re:
What Comcast announced this week is the vehicle that will allow them to sign up TV customers that have TW, AT&T, and other providers as their ISPs.

Thanks! This almost sounds like cable companies are going to start.... competing with each other. I am starting to think you are a raving lunatic for suggesting such a thing. ;-)
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