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Comcast Goes Skinny

Last week, US cable media giant Comcast launched its Stream service in Boston for broadband customers, effectively targeting the millennial demo.

The main strategy remains the same: introducing offerings to retain existing broadband subs and win new ones, with the belief that the company can upgrade subs and offer additional products and services over time.

As video consumption continues to evolve however, whether that means taking new customers back to a bigger bundle, as some start families and move into residential homes, remains to be seen.

Stream is available via an app or online with customers paying US$15 per month (using a credit card) for access to HBO, local broadcast (terrestrial) networks, a 20-hour cloud DVR and several thousand movies via Comcast's Streampix service.

The new platform is efficient for Comcast, in that it does not incur installation costs and additional expenses (i.e. no truck roll).

At the same time, Stream may not cannibalize Comcast's packaged pay-TV service because it’s designed as a mobile-first product, with customers only able to access a limited number of streams on the mobile device.

Stream is available for use through Comcast’s Xfinity TV app for mobile devices and for web-browser viewing. The company plans to expand the service nationally next year.

Significantly, subscribers can only use Stream with devices in their own home at present.

Management also believe that single-family homes with kids won’t find Stream valuable. Marketing for Stream will largely focus on existing broadband customers.

Comcast has other skinny-type services such as Internet Plus, which has performed reasonably well among millennials.

About 30% of Internet Plus customers have chosen to upgrade to expanded broadband and pay-TV services.

Asia relevance

Skinny bundles and a-la-carte services are appearing in Asia, but full-fledged rollout and adoption has yet to occur.

In the Philippines, SkyCable has launched a 20-channel basic product bundled with broadband that appears to be doing well.

Bundled video and broadband offerings are also gaining traction in Indonesia (via First Media and IndiHome) and Thailand (TrueVisions), although these services are anchored to packages of 80-100 channels and upwards.

"In the near-term, it’s likely that skinny products anchored to broadband, on-demand and some linear channels will start to grow in markets such as Australia, Japan, Korea and Hong Kong,” says Vivek Couto, director of research and consulting for Media Partners Asia (MPA).

“It’s clear that players such as Optus and HKBN have already started to move on that front, but they don’t have large legacy linear or packaged branded channels businesses to protect and grow,” Couto adds.

“Their pipes and product are very much anchored to using video to drive broadband consumption and yields, although Optus may evolve on other fronts,” he continues.

“Over the next 12-18 months, it will be important to see what Korea’s SK Telecom and KDDI in Japan do, as well as PCCW, Singtel and StarHub in Hong Kong and Singapore.”

Comcast’s video rebound

Meanwhile, Comcast enjoyed its strongest third quarter in nine years, reducing net video losses by more than 40% Y/Y to reach 22.3 million subs, although its pay-TV business has yet to reaccelerate.

Video revenue also grew 3.3% Y/Y, to US$5.3 billion.

The company continues to grow and invest in X1, its IP-based video platform, which has driven on-demand consumption (50% higher than its non-IP services) and DVR adoption as well as demand for new products, helping boost Arpu and reduce churn.

About 25% of Comcast’s pay-TV customer base has X1, with the company installing about 40,000 X1 set-top boxes a day.

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