Comcast’s (News - Alert) second quarter 2012 financial results illustrate how the U.S. cable TV business has changed. For starters, though Comcast continues to show revenue growth in the video segment, it is losing customer share. Though revenue was up 2.8 percent, Comcast lost 176,000 video accounts.
Overall revenue of $9.9 billion included growth of total revenue per video customer of eight percent, to $149 a month. But most of that increase was from services provided by voice, broadband access and business services.
Since Comcast lost 176,000 video units, the overall growth of revenue generating units of 138,000 came from broadband and voice additions.
To be sure, video revenue remains crucial, at $5.1 billion in quarterly revenue. But high-speed broadband access now contributes $2.4 billion in quarterly revenue, and revenue from that segment grew 8.9 percent.
Comcast added 156,000 net high-speed access customers in the quarter, for penetration of 36 percent. Consider what that statistic means, though. In the past, a telco or cable services provider would build a network that would have, as customers, perhaps 75 percent to 98 percent of all households passed by the network.
These days, no service provider gets more than a fraction of that, from any single service. That is why the triple play has become so important. The only way to earn enough revenue from a much smaller base of customers is to sell each remaining customer a wider range of services.
At the moment, it’s also correct to note that, although revenue from voice and business services is growing, broadband remains the driver for most of Comcast’s revenue. Together, high speed access and video account for 76 percent of Comcast’s revenue in the quarter.
Voice revenue contributed $889 million in revenue, and Comcast added a net 158,000 accounts, to reach 18 percent penetration.
Business revenue increased 34.2 percent to $582 million, while advertising generated $552 million, Comcast reported.
One might note that, of Comcast’s total revenue, “dumb pipe” high speed Internet access now accounts for 24 percent of total revenue. Assume for the sake of argument that half of the business revenue also are derived from dumb pipe high speed access. That would imply a total of about 27 percent of Comcast revenue earned from dumb pipe services.
That also illustrates another facet of cable operator strategy: dumb pipe services are a crucial foundation for 48 percent of Comcast’s total revenue.
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Edited by Brooke Neuman