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

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: ,
Companies: comcast, hbo, netflix

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Comments on “Comcast's New Half-Assed Answer To Netflix Is No Answer At All”

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DannyB (profile) says:

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).

Anonymous Coward says:

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…

s7 says:

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!

Ninja (profile) says:

Re: 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!

Wickedsmack (profile) says:

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.

nasch (profile) says:

Re: 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? 🙂

Erik says:

Re: 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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