Comcast And Netflix: We’re Chill

A story appeared this week in the the music trade Digital Music News claiming that Comcast had coerced Netflix into their recently announced agreement to bundle the streaming service in with Comcast’s pay-TV offering by threatening to impose “paid prioritization” charges on Netflix for delivering its streams to Comcast broadband customers.

The story cited an anonymous source, who pointed to a paragraph in the press release announcing the deal, which reported that “Netflix-related billing will be handled directly by Comcast, giving customers one, simple monthly statement,” as evidence of Comcast’s arm-twisting. Read More »

Set-Top Rapprochement

Back in 2012, writing for the now-defunct GigaOm, I predicted that peace would eventually breakout between pay-TV operators and over-the-top services, a process I dubbed the set-top rapprochement (I was able to find one archived example of my musings still available online).

As OTT services evolved into ever-more viable substitutes for traditional TV, pay-TV providers, I assumed, would eventually realize they were better off embracing the enemy that fighting him, lest they be displaced altogether. OTT services, I imagined, would eventually see the benefit to getting their service onto TV-input 1 in households that held onto their pay-TV service, which is to say most of them. Read More »

Pay-TV’s Rising Sea Of Troubles

Change comes slowly, and then all at once. And it’s coming now to the pay-TV business.

For years — even as technology-driven disruption ravaged the music, publishing, and other media industries — the traditional pay-TV bundle largely held together despite a trickling away of subscribers to cord-cutting.

A big reason it hasn’t fallen apart until now is that programmers and operators shared in interest in keeping it together, even as they regularly clashed over carriage renewals. For programmers, bundling channels into a single carriage deal brings in incremental affiliate fees and increases advertising inventory; for operators, the big bundle helps sustain high ARPU rates and long-term subscriber contracts. Neither side had an incentive to fundamentally alter the structure of the business.

Even the emergence of over-the-top “skinny” bundles proved less disruptive than many expected as programmers successfully pushed OTT providers to fatten up their skinny offerings and raise prices to levels nearly comparable to traditional pay-TV subscriptions.

But the trickle of cord-cutting has now become a flood. And as the water rises programmers and operators have begun to turn on each other in earnest. Read More »

X1 Marks the Spot for Comcast

Comcast and Netflix this week confirmed an agreement to incorporate Netflix’s streaming service into Comcast’s X1 video platform, signalling a dramatic shift in what has long been a contentious relationship between the companies.

“Comcast and Netflix have reached an agreement to incorporate Netflix into X1, providing seamless access to the great content offered by both companies,” the two said in a joint statement given to Recode.  “We have much work to do before the service will be available to consumers later this year. We’ll provide more details at that time.”

netflix_blockThat’s a far cry from a few years ago when Netflix CEO Reed Hastings was working overtime to turn Comcast into public enemy number one in the net neutrality fight and Comcast was imposing interconnection fees on Netflix for access to its last-mile network.

But the shift is more likely the result of a change in circumstances than a change of heart. Read More »

In Cable, The Rich Get Richer

Daniel Frankel, over at FierceCable, noted an interesting pattern in the Q1 data from cable operators this week. All of the vaunted rebound in video subscribers during the period was concentrated among top-tier providers.

Comcast, Time Warner Cable and Charter collectively added 89,000 video subs.

Mid-size operators, however, all experienced continued erosion among video subscribers. Cablevision lost 15,000; Cable One lost 13,000; and Mediacom lost 2,000 across its two operating units.

money_bagsFirst-quarter data on smaller providers, which is compiled by SNL Kagan, is not yet available. But it would be surprising if the pattern there were different from that of the mid-size providers.

In both cases, operators are increasingly making a de facto, if not quite formal, decision not to fight very hard to attract or retain video subscribers because of the high programming costs that come with them and to focus their business primarily on their broadband service.

“The lower end of the market can no longer afford the big bundle; the number of disruptive OTT technologies and vendors are now multiplying rapidly; and the millennial generation has very limited interest in traditional TV viewing,” Cable One CEO Thomas Might told Fierce. “These patterns will inevitably bring an end to the ubiquitous fat bundle, but only slowly and painfully.”

Slowly and painfully perhaps, but the data also suggest it could happen at very different speeds in different markets, depending on the size of the local providers’ national footprint. Read More »