Thursday, March 19, 2015

Comcast Leadership Threatened By Disruption

As the leader in the industry, Comcast is facing the same kind of threats that have faced other leaders for years.  Whether a technological change, environmental, external, internal, or even a change in consumer demand, businesses are challenged to retain its core business or risk losing core revenue to drive new revenue growth.  It is why some well known leader brands are no longer around.  They fought so hard to retain their business model while consumer fled to new competitors.  Examples include Sears, Radio Shack, Prodigy, just to name a few.  Feel free to add to the list.  It is an epic reminder of the classic business novel, Who Moved My Cheese?.

Some companies have successfully adapted to change.  Netflix was a DVD mailing company who was able to change to be the streaming content leader.  Apple was willing to let the iPod decline to introduce the iPhone.  And they did it again with the larger iPhone, a possible killer of the iPad mini.  But change is constant and to stay relevant these and other brands must continually look to adapt and change.

Cable operators face those same challenges as a result of the growth of streaming and the launches of new competitors, including PlaystationVue, Sling TV, and Apple, as well as HBO Now, CBSN, Netflix, Amazon Prime, and Hulu.  Consumers can now leave cable, cut the cord, and get a smaller package of relevant content, at a hopefully lower price, and on any device they choose.  It is the cord cutting nightmare driven by a TV Everywhere approach.  So what to do?

For Comcast and other cable operators to compete in this ever changing entertainment landscape, they will have to reassess how they are delivering their content to the home, what business they want to be, a pipeline or a content aggregator/distributor, and how they want to differentiate to maintain a healthy and profitable subscriber base.  The loss of cable subs means a loss of a monthly subscriber revenue stream as well as a loss of ad revenue from a declining base of users.  As more and more streaming services appear, each building packages of broadcast and cable networks and other programming, more and more consumers will be siphoned off.  The percentage of cord cutters continuing to grow.

To compete successfully, it is time to throw out the old cable boxes.  For Comcast, to push out the IP enabled X1 box, or to offer a TiVo box solution, and enable all programming to be authenticated and offered across all mobile devices, on and off the TV set.  Update your packaging model to encourage consumer choice.  Some homes will always want to buy all programming at one price, but others want to pick and choose their package of service.  Market the availability and accessibility of choice, with online access to quickly pick and choose the networks you want for your personalized package at variable price points.  Let consumers change within their package at a moment's notice or upgrade or downgrade at will.  Make Choice, Accessibility, Variety, Availability, and Simplicity your mantra.  Could CAVAS become the next buzzword?

If consumers are choosing Apple TV over cable TV it will be because Apple enabled consumers to buy a smaller package of content and the choice of where, when, and how to watch.  Comcast can do the same if it wants to save its cable business model and be the ultimate aggregator and distributor of all content.  Or it can become a dumb broadband pipe provider.  More competitors are coming to take your cable business away.

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