Comcast-Charter joint venture points to new chapter in streaming wars

Brian Roberts, CEO of Comcast (L) and Tom Rutledge, CEO of Charter Communications

Drew Angeler | Getty Images

Shrugging last week’s announcement is easy Comcast When charter We have started a joint venture to gain national market share in streaming video distribution. However, the two biggest US cable companies may be playing long games that could lead to a new chapter in the streaming war.

Comcast and Charter said they have developed a 50/50 venture to push Comcast’s Flex streaming platform to more homes across the United States. Comcast licenses Flex to Charter and provides Charter’s Spectrum subscribers with access to the interface. Comcast also contributes to ventures with smart TV business (XClass) and free ad support streaming service Xumo

Charter will now make an initial contribution of $ 900 million to fund expenses and expansion. In addition, Charter will provide voice-controlled remotes associated with Flex-operated devices from 2023 onwards. Flex isn’t a new product, but the partnership almost doubles the potential installation footprint of the device.

On the surface, it seems that Comcast and Charter started this partnership too late. Roku, Amazon, Apple When Google He has been creating streaming aggregation devices and software for over 10 years. SamsungSmart TVs have their own streaming platform built-in.In addition, last week’s Netflix revelation Lost a customer for the first time in over 10 years Streaming subscribers suggest that it may have peaked in the United States, at least for the foreseeable future.

“Given the long years we’ve invested in the platform and the success of our competitors as well, it’s hard to imagine how they will succeed,” said Roku, CEO and founder. Anthony Wood describes the Comcast-Charter venture. During his company’s earnings conference on Thursday..

Wood has historically been difficult for companies to compete with Roku for streaming, as rivals like Comcast and Charter have vast businesses, while streaming is Roku’s sole focus. I added. Roku is No. 1 share in the large screen device streaming marketFollowed by Amazon Fire TV and Samsung, according to research firm Conviva.

Still, Comcast and Charter have significant advantages over other streaming competitors. It’s a technician who enters the house.

Home court advantage

Almost everyone or family moving to a new home or apartment should set up home broadband. Comcast and Charter are the largest home high speed broadband connectors in the country.

Hundreds of millions of US homes are already using streaming devices and may not want to switch. However, Comcast and Charter serve more than 200 million people in US homes. Comcast CEO Brian Roberts and Charter CEO Tom Rutledge can unite in a strategy that directs broadband technicians to connect Flex devices when connecting homes across the country to the Internet.

Currently, Comcast and Charter do not have many consumer benefits to sell on Flex. Companies can market user interfaces, but it’s difficult to market something they haven’t seen to consumers. While Comcast’s voice-controlled remotes make it easy to find content within a cluster of streaming services, Roku and Amazon also have voice-controlled remotes.

In other words, there aren’t many reasons to use Flex on devices that consumers already own. However, televisions and streaming devices will eventually become obsolete. Flexbox is free for new broadband subscribers, at least for the time being.

If there is an industry that knows the video distribution business, it’s cable.

Streaming bundle

Executives from small media and entertainment companies personally say they’re surprised that streaming bundles haven’t happened yet.

“I haven’t seen a great impetus to do that.” Netflix Reed Hastings Co-CEO Told CNBC in 2020, When the company’s market valuation is more than double the current one. “It may be good to experiment with it in some countries, but it’s not a big area for us.”

Netflix Recent stock price plunge And the guidance that customer losses will accelerate in the next quarter can trigger streaming bundles. This is a product that has begun to resemble a smaller version of the cable bundle.

If Netflix agrees to sell the bundled product (for example, purely virtually using Starz, Peacock, Paramount +), a third-party distributor will sell the bundle and authenticate the buyer of the bundle. is needed.

Apple, Roku, Google, and Amazon can all be their third-party bundlers.

However, the “OG” video distributors are Comcast and Charter — cable companies. Selling bundles of video content has always been their business.

And now they’re trying to install streaming devices in millions of American homes. It’s not a big leap to want to sell a bundle of video subscriptions to your customers along with the installation of those boxes.

“We will not only offer these products to millions of customers, but will also open the door to entirely new revenue opportunities,” Roberts said in a Comcast conference call last week.

Rutledge added at Charter’s conference call that it’s only a matter of time before almost all of the company’s customers get streaming video instead of cabled TV.

“I expect most of our customer base to gradually become everything. [Internet protocol],” He said.

This doesn’t happen overnight. But that makes much more sense for Comcast and Charter JV play. They’re playing a long game of streaming war — and hope the end result is a lot like cable TV 2.0.