Comcast's ‘X1 bubble has burst,’ says analyst, citing resurgent cord cutting in 2017

Comcast X1
Image: Comcast

With pending final tallies expected to conclude that the U.S. traditional pay TV business lost around 3.5 million customers last year, nScreenMedia analyst Colin Dixon is seeking to debunk the notion that Comcast’s X1 advanced video platform is an elixir for cord cutting.

In 2016, Comcast added 103,000 pay TV customers, its first video growth in 10 years, with X1 using platforms like the Rio Olympics to showcase nifty new exclusive tech and user experience features. Comcast has consistently billed X1 as a churn buster, beating OTT competitors like Netflix an YouTube by assimilating these services into its menu. But Comcast lost 186,000 video subscribers last year. 

"In 2017 far more customers left rival satellite and telcoTV providers than in 2016,” Dixon noted on his blog. “Unfortunately for Comcast, most appear to have left traditional pay TV altogether rather than switching to its premium X1 experience. As my podcast partner Will Richmond remarked to me last week, it seems like Comcast has already won all the customers that would want its high-priced TV experience.”

RELATED: vMVPD customer base reaches 4.6M but has only recaptured a third of cord cutters, analyst says

As Dixon noted, the top seven publicly traded U.S. pay TV service providers, representing 85% of the market, collectively lost around 3 million linear video subscribers in 2017. If the tallies of the linear platforms covering the other 15% of the U.S. linear market also show a 3.7% annual loss rate, the total decline will be around 3.5 million customers in 12 months. 

Notable losers include the two satellite TV operators, Dish Network (down 1.14 million subs in 2017) and DirecTV (lost 554,000), as well as AT&T’s IPTV platform, U-verse (off by 622,000). None of the Big 7 operators gained linear subs in 2017.

Losses were somewhat hidden by virtual MVPD services. Dish’s Sling TV added 710,000 subscribers in 2017 to reach 2.21 million by the end of the year. AT&T said DirecTV Now had 1 million subscribers as of the end of the year. 

With vMVPDs continuing to pull subscribers from linear services, “we could see traditional pay TV services decline another 5% in 2018 possibly falling below 90 million homes,” Dixon predicted. 

“Traditional pay TV subscriptions declined 4% in 2017, in large part due to low-price vMVPD alternatives,” he added. “vMVPD providers are making little or no profit on their services. Breakeven pricing policies at vMVPDs will persist throughout 2018 and will cause the decline in traditional pay TV to accelerate in 2018.”