Cord-Cutting Hits Comcast as Web TV Services Emerge

The mass media behemoth says it lost 69,000 video subscribers in Q2; CEO remarks some new customers see no need to pay for a set-top box to watch TV.

PHILADELPHIA – During a quarterly earnings call this week, Comcast CEO Brian Roberts briefly addressed the prickly issue of cord-cutting, which describes the phenomenon where customers are abandoning cable and satellite television subscriptions in order to stream their shows over the Internet instead.

Acknowledging that cord-cutting even exists is significant “since Comcast is finally admitting, albeit through gritted teeth, that people can live without its flagship product,” writes Fortune magazine. Roberts’ remark essentially concedes “a once-unthinkable possibility for the cable giant: New customers who don’t, and never will, see the need to pay for a special set-top box to watch TV,” Fortune reports.

The topic came up during the call when analysts asked about Comcast’s new Stream service, which lets broadband customers watch a handful of TV channels plus HBO on the Internet for $15 per month. Roberts did not disclose anything about the initial popularity of Stream, which debuted earlier this month, nor explain how it would compete against rival streaming services like Dish’s Sling, according to Fortune.

Instead, Roberts sought to style Stream as another entry level product for younger customers that could “introduce them to video,” while also admitting these customers’ future relationship with Comcast is “maybe not [through] a set-top box.”

Cord-cutting is indeed taking hold at Comcast and seems irreversible, according to Fortune.  Comcast says it lost 69,000 video subscribers in Q2. But that’s a big improvement over a year ago, when Comcast lost 144,000 subscribers during the same time frame. And it’s much better than Wall Street’s expectations: Analyst Craig Moffett says Wall Street expected a loss of 109,000 subscribers.

Despite a decline in video subscribers, Comcast (NASDAQ: CMCSA) is holding the line for now on the revenue front for cable, in part through feature upgrades and price increases. It’s worth noting that Comcast, which became a company with more broadband subscribers than video subscribers last quarter, kept that trend going. It added another 180,000 Internet customers in Q2, and now sells broadband to 22.3 million customers and video to 22.6 million customers.

Meanwhile, Comcast’s other divisions, including its studios and theme parks, are turning in stellar performances, so the company has ample cushions as it figures out what to do with its core cable business. Its quarterly earnings on Thursday came in at 82 cents per share, which is what analysts had predicted.

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