uComcast Exec: Netflix Thrives Because Cable Is Too Expensive, Is Company’s “Ultimate Frenemy”r

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  Sterling Davis

  This is a weird time to be a cable company. On the one hand, everyone’s watching more content than ever before. And on the other hand, they’re watching cable less than ever before. That’s bad for cable companies, except that cable companies are also broadband companies. The push and pull is a reality almost all of us live in, but it’s something that the cable folks don’t really talk about much. Until they do.

  Speaking this week at an industry conference in New England, Multichannel News reports, Comcast’s favorite executive mouthpiece David L. Cohen conceded that the Netflix giveth, and the Netflix taketh away.

  Cohen admitted what cable executives basically never say, but consumers know too well: viewers have flocked to Netflix because cable prices are too dang high.

  “Netflix is the ultimate frenemy,” Cohen said, adding, “Part of this is a self-inflicted wound. We have made video too expensive.”

  Just over the last few years, broadband has gotten fast and reliable enough, and software algorithms good enough, that HD streaming content is now a simple, easy, affordable option — and it’s everywhere. Given the option to cut the cord and walk away from cable, consumers are, leaving cable companies scrambling to follow.

  Netflix, now up to 65 million subscribers, is the gorilla in the room when it comes to players on the streaming scene, but traditional broadcast and cable networks like HBO, Showtime, Starz, and CBS are hopping on board too.

  Pay-TV competition is erupting, but it’s not coming from cable. Instead it’s from the likes of PlayStation and Dish. Everyone is still watching TV in prime-time, but they’re not touching their TV tuner. They’re just streaming it, instead.

  This leaves Comcast in a somewhat awkward but ultimately favorable position: because they provide the broadband pipes as well as the cable conduit, they are poised for one half of their business to soar even as the other half deflates. And although the era of over-the-top streaming programming might be creating a robust marketplace for programming access, the broadband market is still starved for competition.

  That’s where the “frenemy” aspect comes in.

  “Remember, you can’t get Netflix without broadband service. Those are 3 million customers of our broadband service,” Cohen told his audience, referring to the New England market he was speaking in.

  Netflix not only keeps Comcast customers forking over cash for broadband connections, but also, Cohen pointed out, benefits the company in another way. Because they also own film and programming content, in the form of NBCUniversal, Netflix adds a revenue stream to Comcast when they sign contracts for the library.

  In the meantime, of course, Comcast is not simply going to let other businesses make the money from over-the-top content while their own subscriber numbers dwindle: their first attempt at a streaming service launched at the start of the week.

  Cohen: Netflix is ‘Ultimate Frenemy’ [Multichannel News]

  
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by Kate Cox via Consumerist