uploads/2017/05/Price-Per-Month-of-Over-the-Top-Services-for-Different-Players-2.jpg

Comcast’s Competition from OTT Providers Like AT&T’s DIRECTV NOW

By

Updated

Comcast’s video business

Comcast’s (CMCSA) competitors like Dish Network (DISH) are facing subscriber losses in the pay-TV business while Comcast’s video business is still going strong. Comcast’s pay-TV business is also facing increasing competition from new entrants in the OTT (over-the-top) space like AT&T’s (T) DIRECTV NOW and Alphabet’s (GOOG) YouTube TV.

Comcast was asked about the competitive landscape at the company’s 1Q17 earnings call. In 1Q17, Comcast added 42,000 video customers. In contrast, Dish Network lost 143,000 pay-TV subscribers in 1Q17.

Article continues below advertisement

Comcast stated that a key reason for its success for its video business in the face of rising competition has been its X1 set-top box and its market segmentation strategy. The company noted that it is focused on improving its churn. Not only does it intend to add more customers, it also wants to retain its existing customers.

Comcast’s market segmentation strategy

One example of Comcast’s market segmentation strategy is the company’s Internet Plus plan, which caters to Millennials who want high-speed Internet but are not very interested in streaming videos. As Comcast offers different products among its Triple-Play services, the company is reaching out to viewers who want different kinds of content and are also heavy video viewers.

This market segmentation strategy allows Comcast to upgrade an existing customer instead of losing the customer to the competition. This strategy could also result in reducing involuntary churn for Comcast, which in turn could drive up the company’s average revenue per user for its Cable Communications business.

Comcast’s view of the competition

Comcast noted that instead of focusing on its competitors offering video offerings at a discounted price, the company is more focused on offering an array of products that cater to different segments of the market.

As indicated by the chart above, Hulu’s online television service is priced at the higher end of the spectrum at $40 per month. Comcast’s Stream, an IP-based[1. Internet protocol] streaming service, is priced at $15 per month. In contrast, Dish Network’s (DISH) Sling TV and Sony’s (SNE) PlayStation Vue are priced at $20 and $30 per month, respectively.

Advertisement

More From Market Realist