News Analysis
Comcast Kills 'Cord Cutting'
By Swanni
Washington, D.C.
(February 15,
2012) -- Comcast today announced
that it lost 17,000 video subscribers in last year's fourth
quarter.
Why is that significant?
Comcast had lost 1.6
million video subscribers in the last two and a half years. The
nation's largest cable operator, which once had 24 million video
subs, was left with roughly 22.4 million at the end of last
year's third quarter. And some Wall Street analysts were
predicting that the heavy losses would continue in the fourth
quarter and beyond.
But today's announcement suggests that Comcast has finally stop
the bleeding -- and it should put an end to a trend that never
really existed:
Cord cutting.
During the last year or so, many tech journalists and industry
analysts said Comcast and other cable TV operators were losing
subs because consumers were deciding to 'cut the cord,' meaning
they were dropping their expensive cable packages and
subscribing to relatively cheap Internet video services such as
Netflix.
The journalists and analysts didn't have any hard numbers to
back up their claim, but they continued to repeat it because
video streaming had become a sexy topic in the tech industry.
The tech elite seemed to want to believe that consumers were
choosing video streaming over traditional cable TV because
the tech elite prefers video
streaming over traditional pay TV services.
But if the journalists and analysts had probed a bit further,
they would have discovered that while cable TV operators were
losing video subs, DIRECTV and the telco TV services were
gaining them. Were they getting every cable subscriber who
dropped? No. A small number of recession-weary consumers did
abandon pay TV altogether. But the large sub gains made by
DIRECTV and the telco TV services over the last few years
strongly suggests that few people were anxious to cut the cord.
They just wanted a better TV service.
Comcast, of course, has known this for some time. Consequently,
it has invested heavily in improving its customer service and
expanding its high-def lineup in small and mid-size markets
around the country. This has helped significantly in slowing
down its customer churn.
And if Comcast, and its cable colleagues, continue to invest in
offering a better TV service, I predict they will begin to see
some sub gains in the coming months.
Americans love television -- and they love most being able to
watch their favorite shows when they first come on.
(Particularly live sports) Video streaming services such as
Netflix can never compete with that.
That's why cord cutting will never be a significant force.
Never.
