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Could Comcast Maintain Its Stable Video Revenue Growth?

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Video revenue growth

In 3Q17, Comcast’s (CMCSA) video business comprised ~44% of its total cable revenue and 28% of its overall revenue. The video business grew 4.4% year-over-year. In the last five quarters, it has risen at a compound annual growth rate of 1%, despite the impact of Hurricane Harvey and Irma. Comcast was able to improve its revenue growth by selling bundled products and adjusting rates. Moreover, pay-per-view boxing events drove revenue by 1%.

As shown in the chart above, recently, the company has maintained video subscriber growth in all but two quarters. Houston, one of Comcast’s largest cable markets, was severely damaged by Hurricane Harvey. Harvey was followed by Hurricane Irma, which mostly affected Florida, Alabama, and Georgia.

The company lost 125,000 video subscribers in 3Q17 due to the hurricanes. AT&T (T) and Dish Network (DISH) were also affected by the storms, losing video subscribers.

New product launch expected to drive video revenue

Comcast’s newly launched XFINITY wireless service may boost its video revenue. The company is offering the unlimited data service for $45 per month to customers opting for premium bundled services. Improvements to the X1 platform and expanding it to Canadian markets may also boost the company’s video revenue. However, rising programming costs, coupled with competition from low-cost video streaming operators Netflix (NFLX) and Amazon Prime Video (AMZN), may encourage further cord cutting.

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