Netflix on Comcast X1 STBs looks to be a big win all round, but is it? New SVOD data from IBM illustrates why Comcast had to do the deal, but also demonstrates some of the threats.
Will and I both wrote about the deal between Comcast and Netflix this week. Will focuses on the consumer benefits of bringing the services together. X1 users will be able to use integrated search and voice search to find things to watch across VOD, TV, DVR and Netflix. This simplifies the process of finding something to watch considerably for Netflix and Comcast customers.
I discuss some of the issues that must have been very problematic in the negotiations. Netflix would certainly want to keep user data out of Comcast’s hands. The company would also resist splitting revenue with the cable giant. Unified search likely caused a lot of angst as there is overlap between the two companies’ content catalogs. Finally, Comcast had to get used to the idea of ceding control of its customers to Netflix, at least while they are using the SVOD service.
We both agreed that the FCC unlock-the-box initiative was instrumental in bringing Comcast to the table. It allows the company to claim it is working with SVOD providers without the need for new regulations.
New data from IBM Cloud Video shows why it was important for Comcast to deal with Netflix. SVOD users watch their streaming service as much as their cable TV.
The data also illustrates the importance of video to Amazon. Although the vast majority subscribe to Prime for the shopping benefits, 75% use the video. Jeff Bezos, Amazon’s CEO, says video is instrumental in retaining subscribers and converting people trialing the service to subscribers.
Both Will and I think that Amazon is becoming a big threat to the media industry. It is leveraging its virtual monopoly in online retail to mount a huge play in video. This could be a big problem for Netflix and Comcast.
Finally, we discuss IBM data that shows password sharing is not as big a problem to SVOD as first thought. Turns out it occurs almost exclusively within the family circle.
Chapter 1: Comcast Netflix agreement (1:15)
Chapter 2: Sticking points in the deal (5:00)
Chapter 3: FCC unlock-the-box motivation (9:50)
Chapter 4: New SVOD data (12:50)
Chapter 5: The Importance of Video to Amazon (14:50)
Chapter 6: Amazon big threat to Netflix (20:40)
Chapter 7: SVOD password sharing (22:10)