So far, the seemingly recession-resistant cable (and phone) industries are living up to their reputations. The latest evidence: top cable operator Comcast issued its Q1 08 earnings results this morning showing continued healthy grow in new, high-margin add-on services even if it continues to lose basic cable subscribers. (Download our spreadsheet detailing Comcast's financial and operational data.)
Comcast lost about 57,000 basic video customers during the quarter, which, when compared to the 100,000 or subscribers lost during Q4 07 is an improvement in churn. At quarter's end Comccast served 24.7 million basic subscribers, representing around 49.5% of all homes passed.
Like most cable and phone companies, Comcast is experiencing growth slow-down in its new services after years of heated expansion. Against this backdrop, though, the operator posted decent gains on all fronts.
Digital service gained a net 494,000 new customers to reach 16 million subscriber or about 65% of basic subs. Comcast added almost an equal number of high-speed subs. (492,000) to reach a total of 14.1 million broadband customers representing 28.4% of capable homes by the end of Q1 08.
Telephony growth was even stronger -- during the quarter, Comcast added a net 529,000 net new voice customers, a run-rate up 8% sequentially and 7% year-over-year. Voice growth would have been even higher if Comcast hadn't intentionally lost around 110,000 of its legacy circuit-switched customers. Comcast actually added 639,000 net new digital voice subscribers during the quarter. Netting out the gains and losses, Comcast served 5.1 million total telephony customers by the end of Q1 08, representing 11.5% penetration of capable homes.
It's no surprise, then, that the company rose 10% year-over-year and 5% sequentially to $7.92 billion. Cash flow likewise grew by 9.2% year-over-year.
Posted by Cynthia Brumfield at 12:20 PM | Print | Comments (0)Through a slick PR campaign, a start-up called Sezmi (formerly Building B) is grabbing breathless headlines as the next great thing in TV 2.0 by promising to offer a set-top based video delivery service that works via a complicated hybrid datacasting-broadband delivery system. Sezmi, which has been kicking around for a couple of years, officially announced today that it will launch trials of its complex service in preparation for full-fledged commercial launch. Even more than other box-based alternative video delivery pipe dreams (think Moviebeam, USDTV, iBlast,Geocast and more recently the also much-hyped movie-only Vudu), Sezmi is destined sooner or later, and I would wager sooner, to join the dustbin of TV appliances, no matter how much glowing press it generates today.
Why? For one thing, to make its service work Sezmi needs to lease excess capacity from around two to four broadcast stations per market to deliver the most popular TV channels. Sezmi plans to use digital spectrum to deliver over-the-air signals plus around 24 to 40 of the most popular cable networks, with other TV content shipped via broadband to a DVR-type device that has one terabyte of storage.
But as Glen Dickson points out, most TV stations don't exactly have a lot of excess capacity to lease out and Sezmi won't say where it has struck deals with local broadcasters. In fact, despite the elaborate PR push and trial announcement, Sezmi doesn't offer any details about the markets where it will test its service or how much it plans to charge for the service or much of anything else.
Moreover, Sezmi is going to have a hard time leasing enough capacity to offer high-definition TV signals and as one major telco representative -- and Sezmi is targeting telcos with its service -- said last night, there are a lot of people out there with $2,000 TV sets. Dickson works out the math for Sezmi:
For example, if Sezmi were fortunate enough to get 15 mbps from each station -- which is probably wildly optimistic, as it would mean that the local station would be using less than 4 mbps for its active video signal -- that would still only give it a total payload of 60 mbps in a market. Even when using advanced MPEG-4 compression at very low data rates, which Sezmi said it is, that amount of bandwidth probably can’t support more than 10 HD channels, if that.
For another thing, Sezmi needs to cut deals with TV networks to retransmit and resell their content. But that's easier said than done, particularly for a start-up, and Sezmi won't say which program networks plan to participate in its trials.
One of the biggest barriers is that Sezmi is not aiming its service at consumers but is angling to land deals with wireless or telco partners. The most likely candidates are the biggest telcos such as AT&T and Verizon, both of which have spent billions to build out their own TV delivery services and aren't likely to opt for such a messy alternative.
There are many other issues on top of these major stumbling blocks (for example, as Chris Albrecht notes, it's going to be hard to channel surf the broadband-delivered content, which is true of other Internet-to-TV devices such as Apple TV, but Sezmi is positioning itself as a multichannel video delivery alternative). Sezmi, however, was founded by a former Sony CTO, Phil Wiser, and a former Harvard engineering professor, Buno Pati, and is backed by $17.5 million in A-list venture funds.
This blue-chip background combined with a sophisticated PR push is responsible for all the buzz generated today. But don't buy it. Like so many other similar ventures before it, Sezmi is an exciting concept, imbued as it is with the prospect of bypassing the traditional TV gatekeepers. Someday someone will find a way to loosen the tight grip that cable, satellite and, lately, phone companies have on multichannel video delivery and marry up the infinite capacity of the Internet with the TV set. Sezmi won't do it.
Posted by Cynthia Brumfield at 8:11 AM | Print | Comments (0)
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