X1 ‘separates Comcast from the pack’ amid cord-cutting trend, analyst says

Comcast Xfinity X1 set top box
Comcast added 41,000 pay TV users in the first quarter, as the rest of the traditional pay TV business lost over 750,000 users. 

Count Jefferies analyst Mike McCormack as a bullish buyer in Comcast’s oft-stated narrative that its X1 video platform is reducing churn and driving what is iconoclastic growth in the linear pay TV business.

“Comcast's versatile platform has driven higher engagement and a better user experience, while the integration of Netflix and YouTube should only further help churn,” McCormack said in a note to investors this morning. “We estimate video churn has dropped more than 20 basis points over the last two years, with every 5% of incremental X1 penetration reducing churn 2-3 basis points. In our view, the higher retention separates Comcast from the rest of the video pack. Notably, since X1 reached 30% penetration in third quarter of 2015, the company has grown market share each quarter, cumulatively adding nearly 300,000 subscribers vs. an industry loss of ~425,000.”

Comcast added 41,000 pay TV users in the first quarter, as the rest of the traditional pay TV business lost over 750,000 users. 

FREE DAILY NEWSLETTER

Like this story? Subscribe to FierceVideo!

The Video industry is an ever-changing world where big ideas come along daily. Cable, Media and Entertainment, Telco, and Tech companies rely on FierceVideo for the latest news, trends, and analysis on video creation and distribution, OTT delivery technologies, content licensing, and advertising strategies. Sign up today to get news and updates delivered to your inbox and read on the go.

RELATED: Comcast’s newfound X1 momentum will be undermined by surging programming costs, analyst says

McCormack meanwhile, discounted the notion that Comcast will combine its wireless ambitions with a merger-friendly regulatory climate to go on an M&A shopping spree. 

Comcast’s MVNO deal with Verizon “is positioned as a tool to reduce churn or drive customer acquisition, though longer-term ambitions are uncertain,” the analyst wrote. 

“Pricing appears rational with plan flexibility providing value to families, though the hand-off efficacy will likely be the biggest determinant of success,” McCormack added. “Comcast’s wireless strategy, including the potential for a new MVNO deal, bears monitoring, and is crucial given shifting consumer behavior. We do not anticipate Comcast to take part in industry consolidation in the near term.”

Suggested Articles

Xumo, a free, ad-supported streaming video service, today announced it’s adding ABC News Live to its platform in the U.S. and Canada.

AT&T is rounding out the executive team for its WarnerMedia Innovation Lab, which is set to open in New York City in spring 2020.

Tubi is escalating its fight against Netflix by launching a new ad campaign highlighting what's not on the subscription service.