Kagan: Why Comcast is growing when cable TV is not

If cable TV is on the falling side of the growth wave, why then is Comcast Xfinity continuing to grow, even as others struggle? The growth wave I often talk about always rises, crests then falls. This creates both new growth opportunities and huge challenges for existing players. As the industry changes only some competitors continue to ride that changing growth wave and get stronger. So, let’s look at what Comcast, the largest cable television company is doing right.

In essence, Comcast moves more quickly than other cable television companies like Charter and Altice. This same growth wave has impacted industry after industry over the last several decades. Today, we do business with fewer companies who offer more of these services. In fact, in many cases, today we can get all these services from one company. This is the direction the industry is heading.

Today, cable television companies are competing with telephone companies like AT&T, Verizon and CenturyLink. They are also competing with wireless competitors like AT&T Mobility, Verizon Wireless, T-Mobile and Sprint with their new Xfinity Mobile wireless service. As you see, competition changes and in fact the direction of the entire industry continues to transform and to change.

Fifteen years ago, the local phone business growth crested forcing competitors to make a decision. Companies like AT&T and Verizon changed, expanded their offerings and continuing on their growth mode. Other telephone competitors like CenturyLink, Frontier Communications, Windstream and many others did not take this same route and have not seen the same growth wave continue.

Consider AT&T and Verizon, which have changed their growth paths and are now embracing new technology like wireless, VoIP, pay TV, wireless TV and more.

The writing is on the wall. The formula for growth and success as the industry continues to change. If the growth formula is so apparent, why doesn’t every competitor follow this same strategy? They don’t even have to build their own wireless network. All they have to do is resell with an MVNO agreement with one of the wireless carriers the way Comcast is now doing with Xfinity Mobile.

Pay TV and wireless TV like AT&T DirecTV is challenging cable TV

Today, pay TV and wireless TV or mobile TV is the challenge faced by the cable TV industry. Traditional cable TV has been growing, decade after decade, until the last few years. Suddenly growth has crested and is now falling. Today, competitors are taking market share away from traditional cable TV companies.

Even the name of the industry is modernizing. It’s moving away from cable TV toward pay TV. The reason is the competitors don’t offer TV over a cable. They offer TV over a variety of new ways like the Internet with a service called IPTV or over their wireless networks like AT&T does with DirectTV NOW, which also gets to the customer in a variety of ways including over the AT&T Mobility wireless network.

In fact, AT&T is the most rapidly growing pay TV competitor today. In fact, they are basically the same size as Comcast today. Their DirecTV ranked second at the end of 2017 with 20.1 million pay TV subscribers, while Comcast, has 21.5 million subscribers. That’s an incredible growth wave they are riding.

So, AT&T represents a threat to traditional cable TV competitors like Comcast, Charter and Altice. As other competitors enter the same space like Verizon, that threat to cable TV will only increase.

Wireless TV is pay TV revolution

Wireless TV or mobile TV innovated by AT&T and DirecTV is a new way to deliver and watch television. It lets the user watch TV anywhere in the USA on their smartphone or tablet over the AT&T Mobility wireless network. Now customers can watch live TV anywhere.

This is changing the entire experience for the pay TV audience. And this is causing companies like Comcast Xfinity, Charter Spectrum and Verizon to wake up and start to offer these same kinds of services just to remain competitive.

Wireless is the center of the universe and that means for pay TV too. Cable TV companies tried wireless years ago, but failed. They pulled out within months and sold their wireless spectrum. So, this re-entry is their second attempt at wireless. Can they get it right this time? AT&T is, so it can be done.

Now that wireless continues to expand, and as 5G approaches and new competitors like AT&T DirecTV wins market share, suddenly it’s a big wake-up call to the entire cable TV and in fact the larger pay TV industry.

Comcast Xfinity mobile growth strategy

Some competitors are acting faster than others. I have been impressed with how quickly Comcast Xfinity Mobile got back into wireless. They now offer iPhone and Android handsets. They are only interested in offering this service to their existing customer base. This means they may not be impactful nationwide and won’t change the wireless industry. However, if successful their presence will indeed be felt.

I believe that’s exactly where they want to be. They want to increase their revenues and they want to solidify their relationship with their existing customer base. After all, they don’t want to continue losing customers to AT&T. So, their focus with wireless seems to be to keep their pay TV and Internet customer base intact. Not to be a major player in the wireless space. This may be a smart tactic for Comcast.

Two different cable TV approaches to growth

Charter Spectrum says they will follow Comcast sometime next year. While I applaud their move as well, I have to ask, why are they waiting until next year? And that may be the best way to describe the difference between companies like Comcast and Charter in the cable TV space today.

These seem to be two different approaches. One, the Comcast way, is a forward thinking and actively aggressive company who will do anything to continue to compete and to grow. Two, the Charter way, seems like they have not totally shaken the older, slower, cable TV way of thinking yet. Will they? That’s the question.

While Comcast seems to be on the right track, it seems Charter still has a way to go. I hope they do. I believe Charter executives understand the opportunity and the risk. However, by waiting until next year to offer wireless when Comcast jumped right in, this shows a stark difference between the two, different approaches.

So, congratulations to Comcast for being a fast thinker and a fact actor. This is one solid reason for your success in an otherwise shrinking traditional cable TV market. It will be interesting to see if your wireless approach is successful and if you are able to solidify your relationship with your customers.