January 18th, 2020
According to Statistica, Comcast has declined in video subscribers from 21.99M to 21.4M during the period of Q3 2018 to Q4 2018.
What is driving people away from Comcast? Likely the same thing that drove me away from Cogeco Cable.
- High prices
- Low Quality Content
- Increased Social Media
- Streaming Services
I came to the realisation cable sucked with a simple thought experiment. How much do I watch Netflix? 90% of the time. How much do I watch television? 10% of the time. How much does Netflix cost? $10/month. How much does cable cost? $70/month.
When you start watching services that do not include ads, it can be life changing. Going back to ads is like going from high speed back to dial up.
The ads turned me off cable television in a way that slowly drew me over to Netflix. Truth be told, we cancelled our Netflix membership after a few months of first trying it. But some new shows kept cropping up that looked a bit interesting. So we signed up again and haven't looked back.
I now have the opinion that if something is worth buying which dominates your line of sight, It shouldn't cost > $20/month and definately should not contain ads for that price.
I now subscribe to Netflix, Amazon Prime and YouTube Premium. I have dabbled with Curiositystream and Crave memberships and definitely considering MasterClass.
As for the content? I thought I missed the Olympics and hockey games. But I was able to view Olympic highlights on the internet. And the last time I watched a hockey game I was stunned by how many ads I sat through. It is crazy people pay so much for that. The cable companies had a great scam going where they convinced people to pay them and watch ads that other people paid them to show. Some people are still falling for it.
TV had some great shows. Like Seinfeld and Married with Children. But these shows you can get on streaming services. In fact, there is so much to watch on streaming services there is no way you can watch it all.
I was at my moms house about a month ago and decided to watch a movie with her. It was not well done. The camera work actually bothered me to the point of irritation. I had never noticed bad camera work in a television show before. Not a good way to draw me back in for sure.
Also, watching shows and movies is only one of the things you can do with screens now. While I don't play video games too much these days, I do go on Facebook, Twitter and YouTube.
Facebook dominated my social media usage in 2019, but lately, I have been ramping up my Twitter usage when new YouTube content is not available for all my subscribed channels.
I was doubtful that YouTube Premium would be worth the $15.99 price/month. But now that I have experienced it, I can't go back. No ads is just so much better. It isn't even close. Even though the ads were only 5 seconds long most of the time before you can skip, Premium is the way to go.
So with declining television subscribers (and with good reason) Comcast needs to rely on increased broadband subscribers to make up the difference. Can they do that? Well, one way is to buy other companies that do exactly that. The broadband and the acquisition of European pay-TV giant Sky PLC increased 21%. Can Comcast keep acquiring companies that work out so great like this? Perhaps. I would say not probable.
What is more probable is that a new company will come along this year and next. One called StarLink. If StarLink can provide good quality internet, they can attract customers. They have said on record numerous times that they will offer service which is competitive or even beats the competition.
Starlink will be starting with nothing except some satellite capacity over Nothern US and Canada. They don't have customers to lose. Their competitive price should appeal to undeserved communities or even places not currently able to access broadband. Personally, I would switch as soon as I know they are stable and I would want my parents, and my inlaws to switch also. That is highly probable.
The big thing to watch is the launch date. While there aren't currently enough satellites in the sky to pull this service off yet, I expect a high probability there will be in 2020. From then it will ramp and as it ramps, it will only take away market share.
I am not even sure if the undeserved will be the first in line. Since Elon Musk is launching these rockets, his 28M followers on Twitter and hundreds of thousands of Model 3 owners will create great awareness.
A competitive price point is enough for me to switch away from my currently stable internet just to support Elon's mission.
This internet is basically a means to raise capital to build ships to go to Mars. There is a group of people who will get this service just for that reason.
But ultimately, the process to switch to the service will be the biggest advantage they have. Worst case, you sign up and it takes weeks to send you a StarLink antenna. Best case, your internet sucks, you go to Best Buy, you get an antenna and you cancel your service from your other provider that day.
People aren't going to wait for shitty internet anymore. They aren't going to wait days for repair so that they can sit at home for some 3 hour block of time to make sure that they problem with wires gets fixed. People will take matters into their own hands, find the path of least resistance and get their internet back online.
Cable companies just can't compete. Stability is really the key here. When important internet goes out and StarLink is the path of least resistance with a compelling offer to get people back up, they will do it if they know.
Internet is currently hard to switch. My options suck. I am stuck with this one provider and I pay what they want and I deal with the outages as they come. And they come multiple times/year.
If you take a step back and look at what Elon is doing, yes it is all for Mars, but Mars has nothing. If you can get internet and vehicles and food and shelter and power on Mars, you can easily make a self-sufficient home on Earth as a bi-product.
Solar powered GeoThermal Houses off-grid with Satellite Internet and Electric cars. Oil/Gas-free, Cable-free, Free energy, Free Transportation. Solve the food problem that Kimbal is working on and you have the ability to live anywhere on the planet better than most people are living now for no additional monthly expenses. Except for StarLink.
The competition is coming Comcast. I wouldn't want to be you.
ABOUT THE AUTHOR:
I am long TSLA and TSLA options. I am not a financial advisor. Investing in anything comes with inherent risk. This is not financial advice.