Comcast, Netflix and the Death ofCable

[IceWizard]

Cable providers leverage Internet access to slow the loss of customers.

Telecoms and cable providers like Comcast are expanding online video services hoping to catch up with their growing on demand alternatives like Netflix, but it will take more than these efforts to appease customers ready to sever their cable subscriptions.

Budget-conscious customers are avoiding
expensive cable-TV bundles and instead opting for less-expensive a la carte access offered by Web-based services like Hulu and Netflix.

Subscriptions to traditional multichannel
providers dipped steadily from 101.9 million customers in 2012 to 101.3 million so far in 2015, according to the market research firm SNL Kagan.

Now, the major cable providers are getting into
the a la carte game. Comcast announced its Stream service on Monday, offering its
customers what it calls "a skinny bundle" of
channels including HBO via streaming video. It
will launch first in Boston at the end of the
summer, and then in Chicago and Seattle before becoming available everywhere in Comcast's coverage area in 2016.

The service has some drawbacks: It will only be available on the subscriber's home wireless
network and won't be accessible over public
WiFi or via a set-top box like Amazon Fire TV or Apple TV.

Stream also will cost an additional $15 per month on top of a Comcast Xfinity Internet subscription -- Hulu costs $7.99 per month and Neflix is $8.99.




During an earnings call on Wednesday Netflix CEO Reed Hastings said Comcast Stream was "a potential threat," like other efforts from
multichannel providers that will keep his company pressured to innovate.

Netflix on Tuesday reported that its membership rose to 65.5 million in the latest quarter, up from 50.5 million during the same period in 2014.

The company is expanding in overseas markets, but its U.S. membership grew to 42.3 million, up from 36.2 million a year earlier.

"We can all compete for consumer affection."
Hastings said of Comcast's new offering. But while Stream may put pressure on Netflix, it
will not be enough to stop the migration of
Comcast customers to less expensive, more
convenient Web-based services, says Steve
Beck, managing partner of management
consultant firm cg42.

Poor customer service and feeling forced to purchase channels they don't want as part of a subscription has led 53 percent of Comcast customers to call themselves frustrated, according to a survey conducted by cg42.

That frustration will likely lead 3 percent of Comcast customers to abandon cable subscriptions during 2015, cg42 projects.

"When you take a provider like Comcast, which
has the highest vulnerability with customer
retention in their category, what is the likelihood that customers want to give them an extra $15 per month?" Beck asks. "When 73 percent of customers of major cable providers believe they are predatory in their practices and take advantage of customers, those companies are starting from a pretty bad spot."

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