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May 3, 2022

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New Comcast-Charter Streaming Joint Venture Suggests the Next Chapter of the Streaming Wars is Coming’

It's easy to shrug off last week's announcement that Comcast and Charter have started a joint venture to gain market share nationwide in streaming-video distribution. But the two largest U.S. cable companies may be playing a long game that could lead to a new chapter in the streaming wars.

Comcast and Charter said they had developed a 50/50 venture to push Comcast's Flex streaming platform into more homes across America. Comcast will license Flex to Charter, giving Charter's Spectrum subscribers access to the interface. Comcast also will contribute its smart TV business (XClass) and free ad-supported streaming service Xumo to the venture

Charter, in turn, will make an initial contribution of $900 million to fund expenses and expansion. In addition, Charter will offer Flex-operated devices and associated voice-controlled remotes, beginning in 2023. While Flex isn't a new product, the partnership nearly doubles the device's potential install footprint.

On the surface, it looks like Comcast and Charter started this partnership years too late. Roku, Amazon, Apple and Google have been making streaming aggregation devices and software for more than a decade. Samsung's smart TVs come with their own built-in streaming platform. What's more, Netflix's revelation last week that it lost customers for the first time in more than a decade suggests streaming subscribers may have peaked in the U.S., at least for the moment.

"It's hard for you to imagine how they're going to be successful given the long number of years that we've invested in our platform and our competitors have as well," Roku CEO and founder Anthony Wood said of the Comcast-Charter venture during his company's earnings conference call Thursday.

Wood added it's historically been difficult for companies to compete with Roku on streaming distribution because rivals like Comcast and Charter have sprawling businesses, while streaming is Roku's sole focus. Roku is No. 1 in big-screen device streaming market share, according to research firm Conviva, followed by Amazon Fire TV and Samsung.

The Take

Still, Comcast and Charter have a major advantage that no other streaming competitor has — technicians who enter the home.

Home court advantage
Nearly every person or family that moves into a new house or apartment needs to set up home broadband. Comcast and Charter are the largest home high-speed broadband connectors in the country.

Hundreds of millions of U.S. households already use a streaming device and may not feel a desire to switch. But Comcast and Charter service more than 200 million U.S. households combined. Comcast CEO Brian Roberts and Charter CEO Tom Rutledge can be united on a strategy to tell their broadband technicians to connect Flex devices when they hook up homes across the country with Internet.

Right now, Comcast and Charter don't have many consumer perks to market with Flex. The companies can market off the user interface, but it's hard to sell consumers on something they may have never seen. Comcast's voice-controlled remote makes finding content amid a cluster of streaming services easy, but Roku and Amazon have voice-controlled remotes, too.

In other words, there aren't many obvious reasons for someone to use Flex over whatever device a consumer already owns. But TVs and streaming devices eventually age. Flex boxes, at least for the time being, are free for new broadband subscribers.

If any industry knows the business of video distribution, it's cable.

Bundling streaming
Executives at smaller media and entertainment companies have said privately they're surprised streaming bundles haven't already come to fruition.

"I don't see a big push to do that," Netflix co-CEO Reed Hastings told CNBC in 2020, when the company's market valuation was more than double what it is today. "It might be fine to experiment with that in some countries, but it's not a big area for us."

Netflix's recent share plunge and guidance that customer losses will accelerate next quarter may be the catalyst for streaming bundles — a product that starts to resemble a smaller version of the cable bundle.

If Netflix agrees to sell a bundled product — say, purely hypothetically, with Starz, Peacock and Paramount+ — for an aggregate discount, a third-party distributor will need to sell that bundle and authenticate buyers of the bundle.

Apple, Roku, Google and Amazon could all be that third-party bundler.

But the "OG" video distributors are Comcast and Charter — the cable companies. Selling bundles of video content has always been their business.

And now they're trying to put streaming devices in the homes of millions of Americans. It's not too much of a leap to assume they'd want to sell customers a bundle of video subscriptions to go along with the installation of those boxes.

"Not only will we bring these products to millions of more customers, but we'll open the door to brand-new revenue opportunities," Roberts said during Comcast's earnings conference call last week.

Rutledge added during Charter's earnings conference call that it's only a matter of time before almost all of the company's customers will get streamed video rather than cable-connected TV.

"I expect that incrementally most of our customer base will be all [Internet protocol]," he said.

This won't happen overnight. But it makes Comcast and Charter's JV play make a lot more sense. They're playing the streaming wars long game — and hoping the end result looks a lot like Cable TV 2.0.

Source: CNBC

Understand the WarnerBros/Discovery merger by looking at the genres preferences on the streaming platforms controlled by the company in this weekly data snapshot series provided by Parrot Analytics. This week we are taking a look at the complementarities between the shows available on HBO Max and Discovery Plus.


Key Findings Include

- Following the Warner Bros and Discovery merger in the first quarter of 2022, the genre with the largest share in demand is Reality, which accounts for 28.2% of the total Warner Bros. Discovery demand. This considerable share is due to Discovery Plus’s shows, a platform where Reality represents 70.0% of the demand.

- Drama and Comedy comes next, with 18.3% and 13.8% of the demand. Along with Animation, these are genres in which HBO Max has strengths. For example, shows like South Park, Euphoria, and Game of Thrones had exceptional demand in the year's first quarter.

- Discovery Plus’s catalog is almost entirely made up of reality/documentary content. These genres account for about 40% of the total demand for content on the streaming services controlled by Warner Bros. Discovery. Content available on HBO Max accounts for the rest of it, roughly 60%.

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Freevee, Prime Video Announce Upcoming Content Details; ‘America’s Test Kitchen,’ NFL, Disney

Amazon’s advertising-based video on demand (AVOD) service will soon carry several new original shows, including cooking contest “America’s Test Kitchen: The Next Generation” and family-oriented competition “Play-Doh Squished.”

Freevee viewers will also get to enjoy “Post Malone: Runaway,” a documentary about the face-tattooed musician, and a second season of Prime Video spinoff series “Bosch: Legacy.” There will also be third and fourth seasons of UNINTERRUPTED’s “Top Class: The Life and Times of the Sierra Canyon Trailblazers.”

Additionally, Freevee has secured short-term licensing deals for several Disney-owned films including “Logan,” the “Deadpool” movies, and “The Post.”

The AVOD streamer has also established exclusive linear channels that will run shows such as beloved Canadian sitcom “Kim’s Convenience” and classic episodes of “The Kids in the Hall.” New episodes of the iconic sketch comedy series will debut on Prime Video this month.

Source: The Streamable


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