Comcast can't fight disruption by growing bigger
A company that pursues growth through buyout while ignoring the market realities that are undermining its position will just make a louder noise when it finally falls
Computerworld - Comcast caused all kinds of consumer panic when it announced its intention to buy Time Warner Cable recently. Sure, the buyout, if approved, would greatly reduce competition, and that matters. But the real story is that Comcast is trying to fight change by getting bigger -- and that rarely works.
The problem for Comcast is that it wants very badly to be a content player. That's why it bought NBCUniversal. But at its heart Comcast is a pure infrastructure player facing a number of disruptive forces from streaming media services and even Aero. Its future is very likely as an Internet service, not a content provider.
As Alfred Poor points on Anewdomain.net, researchers found that 70% of U.S. households now have broadband, and 63% of homes with broadband had a TV connected to the Internet. Those TVs are able to bypass cable TV and access streaming content instead. That fact might bode well for Comcast's role as an Internet provider, but not so much for its cable delivery aspirations.
Comcast executives very likely see the same trends and have so far made some clumsy attempts at reacting to them. They have offered Streampix, a mediocre streaming service that doesn't really compete well with Netflix and others. Comcast is one of the owners of Hulu, but those owners as a group seem confused by the property. It looks like a love/hate relationship, with the owners never quite sure whether to invest more in Hulu or sell it.
And Hulu itself is less attractive than services like Netflix, YouTube and Amazon Instant Video because it includes commercials, even on the pay version, Hulu Plus.
Time Warner Cable was ready to meet the disruption head on with a deal to run Netflix on its set-top boxes, but that deal was reportedly scuttled when the Comcast deal was announced.
Meanwhile, the inevitable tide of change is sweeping over Comcast. It must contend with growing numbers of cord-cutters, people leaving cable-TV providers behind and using a streaming box like Apple TV, Google Chromecast or Roku (or even an Internet-connected game console) and running the streaming services on their big-screen TVs for a lot less money than cable.
Sure, those cord-cutters still might use cable for broadband, but what is the incentive to pay big bucks for Comcast content when you can get Netflix for as low as $7.99 a month? Or, if you're an Amazon Prime member, you can get access to Amazon Instant Video for $79 a year. That's less than the cost of a single monthly cable bill for most people.
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