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

Overhype

from the learn-to-compete dept

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?

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