I’m pleased to present the 443rd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Comcast is on a roll in broadband. In a highly saturated market, Comcast managed to add 334K residential broadband subscribers in Q3 ’18, nearly double the 182K it added a year earlier. On today’s podcast, Colin and I discuss the factors that are driving Comcast’s broadband growth and how the company has fully pivoted to a “connectivity” strategy.
The only wrinkle is that Comcast could be more aggressive in defending its video business. While subscriber losses improved in Q3 ’18 vs. a year ago, the macro trends of skinny bundles, SVOD, cord-cutting, etc. are unremitting. It’s still not clear Comcast has an aggressive response, other than to be an “aggregator of aggregators” via X1 and continually reiterate it doesn’t want to pursue low margin video services (i.e. skinny bundles).
Listen in to learn more!
Click here to listen to the podcast (23 minutes, 52 seconds)
Last Thursday, Comcast reported a loss of 95K residential video subscribers in Q3 ’18, an improvement over the 134K it lost in Q3 ’17. Losing subscribers is never something to be celebrated, but amid the onslaught of skinny bundles, SVOD, cord-cutting, etc. the improvement was noteworthy (and certainly reflected the fact that AT&T slowed its promotion of DirecTV Now in Q3 ’18, which is why it gained just 63K skinny bundle subscribers, down from 323K a year ago).
For Comcast it was a welcome relief from Q2 ’18, in which it lost 140K video subscribers, over 4x the 34K it lost in Q2 ’17. On its Q2 earnings call, Comcast executives acknowledged that skinny bundles were taking their toll, and yet they did not seem to articulate an aggressive response. But Q2 ’18 also saw the addition of 260K residential broadband subscribers, up from 175K adds in Q2’17. Given how highly saturated the residential broadband market now is, this jump seemed surprising, and yet, it was barely explained on the Q2 earning call.
I’m pleased to present the 436th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
This week Verizon announced the introductory offer terms for early customers of its 5G Home service in 4 launch markets. Colin and I are both impressed with how strong the offer is and also how targeted it is to cord-cutters. We discuss Verizon’s strategy, and more broadly what impact Verizon and other upcoming 5G launches will have on the broadband and pay-TV industries.
In particular, the pairing of 5G with a skinny bundle (as Verizon has done with YouTube TV) has caught our attention as likely to resonate well with consumers, especially with aggressive pricing. Still, we’re cautious that 5G has to perform as advertised and that 5G rollouts will be long and expensive. Potentially significant market disruption is still likely years away.
Listen in to learn more!
Click here to listen to the podcast (22 minutes, 15 seconds)
Verizon has announced an aggressive, video-focused offer for its initial 5G launch, underscoring how potentially disruptive wireless telcos could be for both broadband and pay-TV services.
Starting tomorrow morning, residents of Houston, Indianapolis, Los Angeles and Sacramento will be able to visit “First on 5G” to determine whether Verizon 5G Home service is available in their area. If it is, then the service will become available beginning October 1st (though it’s not clear how quick activation would be). The introductory package is extremely compelling and includes:
Topics: Verizon Wireless
Comcast reported its Q2 ’18 results this morning, with the good news being the addition of 260K broadband subscribers, the best Q2 the company has experienced in the past 10 years, along with the improvement of operating margins. The broadband surge was Exhibit A for management to point to on the earnings call as evidence its strategy of being a “connectivity” provider is paying off.
However, Q2 ’18 also saw the loss of 140K video subscribers, the most in a Q2 since 2014. Video sub losses have accelerated from -4K in Q2 ’16 and -34K in Q2 ’17. On the earnings call, management put the blame squarely on virtual MVPDs or “skinny bundles,” adding that they “expect pressure to continue in the video business” as virtual MVPDs ramp up.
Broadband connections keep getting better, enabling video and other high-bandwidth applications, according to Akamai’s Q1 ’17 State of the Internet Report. Global average connection speed was up 15% vs. a year ago, to 7.2 mbps, with 96 of the 149 countries/regions that Akamai tracks seeing an increase.
Perennial leader South Korea had the fastest connection speed, at 28.6 mbps, followed by Norway (23.5 mbps), Sweden (22.5 mbps) and Hong Kong (21.9 mbps). All of the top 10 countries has an increase vs. last year’s Q1 except South Korea, with dropped modestly. The U.S. broke into the top 10 in the number 10 position at 18.7 mbps, up 22% vs. a year ago, the biggest change among the group. A total of 25 countries/regions had an average speed of at least 15 mbps, up from 23 in Q4 ’16.
Categories: Broadband ISPs
Akamai has released its State of the Internet report for Q3 ’16 finding, among other things, that global average broadband connection speed increased 21% to 6.3 Mbps vs. Q3 ’15. The country with the biggest jump in the past year was South Korea, which increased 28% to an average 26.3 Mbps, with Hong Kong next, up 27% to an average 20.1 Mbps. South Korea continues to have the highest average connection speed.
The US had an average connection speed of 16.3 Mbps, with the top 5 and their improvement over Q3 ’15 as follows: District of Columbia (24.8 Mbps, up 1.8%), Delaware (21.4 Mbps, up 9.8%), Utah (21.4 Mbps, up 13%), Massachusetts (21.1 Mbps, up 11%) and Rhode Island (20.7 Mbps, up 5.4%).
Online video is booming. But that doesn’t mean all industry initiatives will succeed. Two examples in just the past two days illustrate the point. Yesterday Verizon announced it was acquiring Vessel for an undisclosed amount in what appears to be a straightforward asset purchase and talent acquisition. And on Tuesday, Google Fiber announced that it was stopping all expansion into new markets. Both companies’ leaders, Jason Kilar at Vessel and Craig Barratt at Google Access, will be departing their positions.
While the two companies operate in distinct segments of the market - Vessel in content and Google Fiber in infrastructure - both were bets on new business models and consumer demand that do not seem to have panned out.
This morning’s WSJ article, “Google’s High-Speed Web Plans Hit Snags” chronicles how Google Fiber has fallen way short of expectations and has experienced ongoing technology/deployment issues since its initial rollout 4 years ago. None of this surprises me and loyal VideoNuze readers will recall I was deeply skeptical from day 1, when I wrote, back in July, 2012, “Google Fiber is Out of Synch With Realities of Typical Consumer Technology Adoption.”
Google Fiber’s main value proposition and differentiator have always been 1 gigabit per second broadband service. But the problem is that very, very few people wake up in the morning wishing they had 1 gigabit so that, for example, they could stream 4K videos on 10+ devices at the same time, which is one of the key benefits Google Fiber promotes. Even as streaming video usage in the home has soared over the past 4 years, with the proliferation of high-quality video services and connected TV devices, most users have been satisfied with the quality of their broadband connection.
Categories: Broadband ISPs
Topics: Google Fiber
Cisco has released the 11th edition of its Visual Networking Index (VNI), forecasting that video will account for 85% of North American Internet traffic by 2020, the highest of any geographic area. Video traffic in North America will grow at a compound annual rate of 21%.
Globally, video-related traffic will account for 82% of Internet data, up from 70% in 2015. In a briefing, Thomas Barnett, who oversees the VNI, characterized video as the “king of all content.” In fact, video dwarfs every other Internet application, with the second biggest - web/data usage - representing just 14.4% of traffic in 2020, a fraction of video’s 82%.
Comcast is on an epic roll. Despite years(!) of cord-cutting warnings by the blogosphere and analysts, Comcast once again proved the naysayers wrong, adding 53K video subscribers in Q1 ’16. It was the best first quarter in 9 years for the company and easily eclipsed the loss of 8K subscribers in Q1 ’15.
The Q1 gain builds on the strong year Comcast recorded in 2015, losing just 36K subscribers vs. a loss of 194K in 2014. Remarkably, Comcast now has 25K more video subscribers that it did one year ago (22,400K vs. 22,375K).
ISPs NetZero and Juno, both part of United Online, will deploy Synacor’s web portal, which includes syndicated content including “Don’t Miss” an original video program covering TV shows, the companies announced this morning. The portal also includes joint monetization opportunities. The portal uses responsive design for optimization across desktop and mobile devices. NetZero and Juno maintain over 1 million active accounts across broadband, mobile broadband and high speed dial-up.
Akamai has released its Q3 2015 State of the Internet report and, as always, it is chock full of details about global Internet connections. One of the more interesting data points Akamai found related to online video is that 15% of the world’s Internet connections now average 15 mbps or higher, the speed Akamai has designated to be “4K ready.” That’s up from 12% in Q3 ’14.
South Korea once again had the highest percentage of connections above 15 mbps, at 45%, which was actually down from 66% in Q3 ’14. In second place was Sweden at 38%, up from 29% a year ago, followed by Norway at 37%, up from 21% a year ago. Switzerland and Hong Kong (both at 36%) rounded out the top 5 countries that are 4K ready.
Sandvine has released its December, 2015 Global Internet Phenomena report, revealing that video and audio traffic now accounts for 70.4% of North American downstream traffic on wired networks in peak period. Sandvine said that 5 years ago, video and audio accounted for less than 35% of peak period traffic.
Netflix has become even more dominant in the past year, now with 37.1% of downstream traffic, up from 34.9% that Sandvine reported in November, 2014. Among other popular services, YouTube was in second place with 17.9% share (up from 14% share in Nov. ’14), Amazon Video was fourth (3.1% share, up from 2.6% in Nov. ’14), iTunes was fifth (2.8% share, flat from Nov. ’14), Hulu was sixth (2.6%, up from 1.4% in Nov. ’14) and Facebook seventh (2.5%, down from 3% in Nov. 14).
I'm pleased to present the 295th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
First up this week we dig into Yahoo’s decision to write off $42 million related to 3 of its long-form original programs, including the high-profile “Community.” As Colin and I explain, Yahoo faced a lot of headwinds from the start in making these a success. Yahoo’s bellyflop is actually not a big surprise and it’s a yellow flag for others interested in providing long-form content.
We then transition to talking about why HBO Now’s distribution with large pay-TV operators / broadband ISPs is stymied. At the WSJD conference this week, HBO CEO Richard Plepler lamented the company’s lack of progress. But as I explain, HBO Now represents more cord-cutting risk than upside opportunity to most operators (for more color on that, see here). Colin disagrees and thinks operators should be more aggressive. We have a healthy debate.
Listen now to learn more!
Click here to listen to the podcast (24 minutes, 29 seconds)
Click here for previous podcasts
Click here to add the podcast feed to your RSS reader.
The VideoNuze podcast is also available in iTunes...subscribe today!
It’s been a rough few weeks for all companies in the TV and pay-TV industries as cord-cutting and advertising shifts have taken center stage. Stock market sentiment has turned bearish as investors have extrapolated that the long-stable days of TV and pay-TV are officially over.
But a more granular analysis of actual video and broadband subscriber data for Q2, as well as a clearer understanding of what’s driving the market forward, suggests that such a broad brush approach to all players is misplaced. In reality, big cable operators had a standout second quarter in both video and broadband and should be poised for even further gains going forward as OTT becomes the single biggest industry influence.
Topics: Leichtman Research Group
Charter Communications will acquire Time Warner Cable in a $78.7 billion deal, while also continuing its plan to acquire Bright House Networks for $10.4 billion. Assuming the deals close, Charter would become the 3rd-largest pay-TV operator/broadband ISP in the U.S. with a total of approximately 23.9 million subscriber relationships.
Like the prior Comcast-TWC transaction, these deals are driven by the desire for greater scale which supports the huge investments required to innovate in video and broadband services. In this morning's analyst call, Charter CEO Tom Rutledge repeatedly referenced the ability to spread investments over the larger subscriber base as a key benefit of the deals.
Today Cablevision announced a first of its kind distribution deal with Hulu. The deal follows the introduction of Cablevision's new low-cost "cord-cutter" package (broadband plus a free OTA antenna) last week and its agreement to promote the new HBO Now OTT service. Given all of this I think it is now virtually guaranteed that Cablevision will soon announce that it will also distribute/promote Netflix.
With the FCC voting 3-2 to enact net neutrality regulations under Title II of the 1934 Communications Act, the focus now shifts to how Comcast proceeds on its planned Time Warner Cable acquisition. The $45 billion deal, combining the two largest U.S. cable TV operators, was announced in February, 2014, and has been in the regulatory slow lane for months as net neutrality took center stage.
Once perceived as virtually guaranteed to be approved given Comcast's formidable lobbying apparatus, the deal is now seen as having no better than a 50-50 chance by many analysts. While Comcast continues to express confidence the deal will be approved and close in early 2015 (and even internally circulated a combined company organizational structure), the dynamic regulatory, political and industry landscapes make any bets on the deal's outcome a total crapshoot.
I'm pleased to present the 262nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Today we candidly discuss the potential impact of the FCC's new net neutrality regulations.
Over the past 20 years we've all benefited from a continuous improvement in wired and mobile broadband connectivity (albeit not perfectly consistent by geography or provider), fostered mainly by a "light touch" regulatory environment that spurred private sector ISPs to invest tens of billions of dollars in network upgrades. Content and services have flourished across both wired and mobile networks.
Although I strongly believe we should continue to have an open Internet, and have no issue with rules that would have ensured that, I explain why using the 80 year-old Title II model to classify broadband as a utility was incorrect. Mainly I believe it will drive lots of litigation and create lots of regulatory uncertainty for broadband ISPs, which translates into disincentives to invest and further upgrade their networks. As a result, ongoing innovations in content and services, which rest on the foundation of broadband improvements, will inevitably be impacted.
Further, I'm always wary of the risk of "unintended consequences" that accompany any new regulations. As such, preemptive regulation - such as yesterday's - where no fundamental problem even yet exists, makes me even more anxious. In short, my attitude is "don't fix what ain't broke."
I fully recognize that I hold a minority opinion on this because I've discussed the topic with many people in the industry already. Colin disagrees with me, for example, because he believes the disincentive to invest argument is overblown. Unfortunately, I think the whole net neutrality debate has become so confused and politicized that any real purpose of potential government intervention has long since been lost.
Listen in to learn more!