Comcast has 15 billion in net income last quarter whereas Netflix had 185 million. And PE ratio of comccast is 19 whereas Netflix is 188. In the future where the cord cutting trend continues and Netflix gains tons of subscribers the valuation might make sense. But for now, I feel this looks like very overvalued.
The whole idea of "cord cutting" hurting cable is insane. If you don't subscribe to cable and you subscribe to internet based streaming services, you're still getting content delivered to your home via either a cable "cord" or the phone company. Netflix at most gets $12/month per subscriber. Comcast will get $80 - $110/month for internet service. Comcaast also has either no competitors in their market or at most one.
Comcast owns NBC and bunch of cable companies and has an ownership stake in Hulu. Comcast gets your money either way.
Netflix has to spend money on content and only has one way to recoup the cost -- subscriptions. Comcast also produces content via its TV and movie studios but makes money off of content via broadcast networks, cable companies, video on demand, and licensing to streaming companies and pay tv.
> The whole idea of "cord cutting" hurting cable is insane. If you don't subscribe to cable and you subscribe to internet based streaming services, you're still getting content delivered to your home via either a cable "cord" or the phone company.
Right now, people pay $150+ for a package with all the TV channels, while you can get the broadband for $50 or so. Cable companies could dramatically raise prices on the basic broadband service to compensate. But that’s not going to fly in this next generation with 5G and satellite competition.
The average Netflix user watches 600 hours per year, or 50 per month. HEVC is 1.5 gigs per hour for 4K, so that’s under 100 GB per month. If data caps for 5G increase at about the same pace as for 4G, wireless data caps will be within that range within five years. Heck, AT&T’s fixed wireless is already at 160 GB per month. And Verizon has publicly stated its 5G service wonkt have the kind of data caps its 4G service has: https://www.pcmag.com/news/357374/verizon-no-4g-level-data-c....
The idea that cable providers can raise prices to compensate for lost TV revenue is predicated on the assumption that there are no alternatives. That assumption ignores just how much bandwidth 5G gives you to play with.
Interestingly, you can get a cheaper promotional rate if you bundle local TV channels (cheaper than $75/month for both internet + tv) so Comcast can inflate its video subscriber (to boost their stock price) amount and they hope you forget you're on a promotional rate your bill jumps $30-40 after you drop off promo. You're free to negotiate (most people do) to get back on the promo rate; many people have success with this, but it's just a cat/mouse game and a hassle.
And Comcast also has a 1TB monthly usage cap. When the era of 2160p + HDR arrives in the next few years, people will chew through that cap rather quickly.
Comcast will continue to jack up standalone broadband prices to hedge against fleeing video subscribers. Why? Because they can, and have very little competition in most markets.
> Comcast will continue to jack up standalone broadband prices to hedge against fleeing video subscribers. Why? Because they can, and have very little competition in most markets.
That's coming from the perspective of an HN reader, for whom wireless isn't "competition." (I get it, I've got two fiber lines to my house; 3 gigabits total. My daughter uses it to stream Magic Schoolbus.) But for the typical user, 5G wireless services (say 50-100 mbps with 100GB data cap) is going to be enough. We're already at 15% of households making $100k+ ditching wired Internet for 4G. That number is growing, and will explode when 5G service rolls out.
My Comcast went down yesterday for about 18 hours (I have zero other options at my apartment for high speed Internet) and I tried tethering on Verizon LTE to play some games. Latency was between 60ms and ~900ms with some random disconnects. This is in TF2, which runs on the Source engine. Anything above about 400ms is pretty unplayable.
Bandwidth caps are yet another issue. 4G is NOT a suitable alternative for me today, and won’t be in the foreseeable future. Maybe if I had a dedicated antenna transceiver on the roof (also not allowed at most apartments) and they massively upgraded tower capacity had a 10-100x increase in bandwidth caps, but....I’m not holding my breath. If Verizon can keep getting >$100/mo ARPU providing 5GB of data with Comcast getting the same for providing 1TB and both have monopoly / duopoly conditions, they have no incentives to compete or upgrade their infrastructure.
As to bandwidth caps: for $100 including fees, you get unlimited on Verizon, which has a 22 GB soft cap per line (in practice, you can use way beyond that).
Your point about duopoly is completely divorced from facts. The cell carriers are in a market with four competitors, and invest massively in infrastructure (tens of billions of dollars a year). Cellular has improve way faster than many other areas of technology over the last decade. 10 years ago, I had a Core 2 polycarbonate Macbook and AT&T 3G service. The former is still a perfectly serviceable computer (the new Macbook is maybe twice as fast). But my Verizon LTE is probably 10-20 times faster than my 3G service.
What else do you use that is 10 times better than it was a decade ago? Google Search? Gmail? Facebook? iOS?
>> What else do you use that is 10 times better than it was a decade ago? Google Search? Gmail? Facebook? iOS?
Heh, ironically, the "wired" internet is surely 10X or more faster than a decade ago. Anecdotally, I have a 1 Gbps connection now; year or two ago I had a 250 Mbps connection, and 2-3 years prior to that it was 50Mbps. Ten years ago it was, what, 5Mbps or 2Mbps.
But the price of cellular data has come way down. For instance when the iPad was first introduced, it was only available in the US on AT&T and was $25 for 2Gb of data per month. Now I'm paying an extra $20 a month on T-mobile for unlimited data for my iPad.
The cellular iPad wasn't even worth it for me until I could get unlimited data for $20. For that amount the extra convenience of not having to tether and basically having a second phone is worth it since you can get and receive regular phone calls to your paired cell number from an iPad even if your phone is dead.
Nice. Myself, I did not see price drops -- I've been paying ~ $100/mo for cell phone plan (5GB data) for some years now -- 3 years at least maybe 5 years or more.
I pay a total of $180 a month for 5 phone lines unlimited data on each + an iPad, unlimited 512Kbps tethering on each + 10Gb of high speed tethering on one for my son who uses his cell phone for his only internet. This is with T-mobile. They also throw in a family Netflix plan (4 simultaneous streams) with it.
Wireless can't compete because if everyone is on wireless, it will be dead slow, unless you make the cell size incredibly small. Small cell sizes require far more radio towers (often a non-option anyway due to zoning restrictions). And even if you do get microcells setup on traffic lights every half mile, you will then need the last mile infrastructure that comcast has for backhaul, unless you want to build your own land network. So I don't see the competitive advantage over another company just coming in with landline.
The other idea for small cells is femtocells, but in that situation you are running traffic over home internet connections so it is definitely not a way to cut out comcast.
Even at 5G speeds and 100 GB data caps, home internet being run over wireless would completely overload most of our current wireless infrastructure. The cell sizes are just too large for that kind of capacity.
Small cells will be a critical part of 5G deployment. The FCC is projecting they’ll need to approve ten times as many cell sites for 5G as have been approved to date for all previous technologies. They’re working to reduce the regulatory barriers to doing that: https://venturebeat.com/2018/03/22/fcc-votes-to-streamline-5...
Small cells are still way cheaper than building land line. I had Comcast run fiber to my house recently, and it was very interesting to see the process play out. Aside feom waiting months for a permit, running fiber along the main street was quick. Running it down my weird little side street took just as long as running it half a mile down the main road. And running it through my yard took just as much time as that. Getting rid of the last 1,000 feet is a huge benefit.
I'd argue that with more than two people in a household and everyone switching to streaming services, you'll need to offer at least 400-500GB data caps for fixed wireless 5G.
Several of my renters are single, and their streaming usage for an individual is ~450GB/month.
You need 400-500GB to accommodate who? According to Comcast, median Xfinity data usage in 2H 2017 was 131 GB: https://www.xfinity.com/support/articles/data-usage-average-.... That's going to be squarely within the range of 5G (analysts are guessing around 200GB caps at first). Also, expect to see video content be zero-rated (it makes technical sense--watching Netflix from one of Netflix's co-located CDNs puts a lot less load on the network).
Remember, 5G doesn't need to be an alternative for everybody to wreck the ability to raise prices to compensate for lost TV revenue.
> According to Comcast, median Xfinity data usage in 2H 2017 was 131 GB
Given their recent push for data caps (and make money off of overages), I'm sceptical of their numbers. They have a pretty obvious incentive to misrepresent (if not understate outright) the value to make their caps appear generous.
Also, is median (same as 50th percentile, right?) really the right statistic to consider? I'm not sure any one number is sufficiently meaningful, as the shape of the graph can be particularly informative.
More importantly, how has that changed over time, as compared with the penetration of 4K TVs versus 1080p ones (or the availability of 4K content or some similar metric)?
Conversely, I think mobile data is also more likely to be significant as competition in multi-person households, even with the caps you mention, because those have a chance of being per person/handset (absent family/share plans), while Comcast is likely to be one cap per household no matter how many people/screens stream at one time.
The idea that cable providers can raise prices to compensate for lost TV revenue is predicated on the assumption that there are no alternatives. That assumption ignores just how much bandwidth 5G gives you to play with.
All of the major cell carriers are already offering unlimited internet with SD video streaming. My older son doesn't have home internet service at all. He streams everything either from his phone or his PS4 and tethers from his phone. That's good enough for him.
Right now, people pay $150+ for a package with all the TV channels, while you can get the broadband for $50 or so
I pay $70 a month for AT&T's gigabit internet and on top of that I pay $35 for DirecTVNow and $12 a month for Hulu without commercials. I would be paying $13 a month for Netflix, but it is free with T-mobile.
The actual price of TV service is a wash. I won't go back to TV via the cable company because of the BS fees -- cable box rental (for us it would be $50), Broadcast Access, Sports Access, Regulatory fees (that aren't mandatory government fees) add up to another $80.
On top of that DirecTVNow+Hulu is a lot more flexible. We can watch from anywhere. That's a big deal for my wife. She has a split shift and when she isn't at the gym she can catch up on TV on her phone.
Yes 1Gbps up and down is overkill. In the real world, (outside of speed tests) the best I was able to get was around 100Mbps u/d when connecting to my company's colo via VPN after business hours. Even Amazon limits my connection to my AWS resources to around 70Mbps.
WiFi the best I can get is around 400/400 when standing right by the router on either my phone or laptops.
Video needs at most 20Mbps and I don't know how much bandwidth that my son's PS4 or Xbox can't take advantage of.
Every bedroom in our house, the living room, the gym, and my office are wired. But my 3rd Gen AppleTVs only have 100Mbps connections, my Roku sticks/TVs are WiFi and only the game systems, my computers in the office and my one 4th Gen AppleTV actually have wired gig-e connections.
On the other hand, the gigabit plan is the only one that doesn't have a cap.
But if I had XFinity (thank God I don't) even thier gigabit Service is limited to 35Mbps upload.
A basic HD cable package on top of my old Comcast Internet subscription added MAYBE $20 to the cost of my Internet plan due to the bundle discount. Oh, and Comcast threw in HBO for free, which is worth about $15 a month.
To get the equivalent channel access as such a service, you've got to pay for YouTube TV or PlayStation Vue or the like, and you're looking at $40 a month there.
Obviously, prices vary by where you are, but in a lot of cases, cord cutting actually removes efficiency. And note that Netflix is rapidly abandoning the "buy all content" model in favor of just having it's own shows. So you'll need Netflix + Hulu + CBS All Access + Disney's new service, etc.
True, Netflix had the first mover advantage, but that's about it. Netflix will not have most of the entertainment content that is available in the world. As long as people have diverse interests, they have to continue paying subscription costs in one way or the other; instead of cable subscriptions it will be streaming subscriptions.
Inclusive. It used to be cheaper to have TV than to not have TV because of the bundle discount (which is why I had initially gotten it, despite never watching TV on the actual box), particularly before I upgraded to HD. The broadcast and regional sports fees are really what brought it up to costing an extra $20 or so, they raised those fees a lot in the last couple years.
(Insert pet peeve about paying a regional sports fee if I don't watch sports here.)
> The idea that cable providers can raise prices to compensate for lost TV revenue is predicated on the assumption that there are no alternatives.
Which is increasingly correct, since the same entities that sre cable operators not only largely own the fixed consumer internet connections, they also largely own the mobile broadband providers and satellite broadband providers, and, even if they didn't own the pipes, they own a lot and are in the process of buying up more of the video content channels and the content itself.
No, it’s increasingly less correct. Right now, Verizon and AT&T don’t compete with each other, or with Comcast in most places. With 5G, you’ll have 3-4 entities offering broadband in almost every market.
The TV channels cost massive amounts to the cable company, too, though. Internet prices wouldn't have to change much. Comcast is a particularly special case because they own a bunch of channels (NBC Universal), though - others have much smaller footprints.
But agreed that the realistic threat isn't Netflix or Youtube or Sling or Hulu, it's wireless broadband. I'm not as optimistic as you, though, based on my experience with cell phone service in my apartments. :|
Really curious to see the technology that develops in response to the latency introduced by wireless internet.
I'm not familiar with domains that have a huge dependency on latency other than high frequency trading (who are already next door), but I imagine it's a problem we'll have to solve at some point.
Wireless latency is not bad at all. It’s already not noticeable on LTE (around 20 ms) and on 5G the air interface latency will be less than what’s added on the transit network.
I pay my provider (in Germany) 29 EUR/Month, and that's for a premium offering (it's actually a business contract, not a consumer one).
Sooner or later, despite the ridiculous monopolies, the lobbying power, the borderline illegal obstacles to newcomers, regardless of how deeply entrenched they are, these ridiculous $100/month providers will eventually be disrupted.
So I see Comcast's revenue source under a considerably more realistic threat than Netflix's. Moreover, both have fixed costs but I'm sure Comcast's are higher, having to maintain tons of last mile connections to individual homes.
So yeah, that multiplier disparity may be excessive, but not by much. If Comcast hadn't invested in Hulu, some might even had considered the disparity too small.
People are always comparing ISP offerings in Europe/Japan to the US and saying it doesn’t make sense, but the scale of deploying service are just not the same.
Average population density is borderline meaningless, it's the distribution that counts. A single cable between long stretches of nothing won't be the deciding cost factor, it's the net that has to be weaved afterwards. (Although - without having hard data - I'd guess that US-style sprawling suburbia is quite expensive to provide for..)
These prices are not valid outside of the higher density neighborhoods (by German measurements). You won't get that Internet outside of a settlement.
Yes, theoretically the cost of connecting smaller villages/town that are rather isolated to the next fiber hub is much more noticeable, but as long as you don't service a location where you can't get at least 1k homes from a single fiber hub with 'normal' 10km transceivers over single mode cable, bill the cable to the customer as a setup fee (1$/m should be feasible, and you can split the cost if you can share part of the distance between multiple customers, by splicing the customer lines to a trunk cable), and buy reasonably priced peering. Maybe bill at a like 80% or 90% peak billing (traffic get's averaged over 5 min time slots, the 20%-10% highest ones get ignored, and the maximum speed left after that gets billed at x$/(Mbit/s), each month. This makes it clear that it's only expensive to provide the Internet speed if it's not sufficiently averaged out over time.
But regardless, serving anything with a population density high enough for car-price-competitive bus service of once per hour, walking distance max. 10min, between 7am and 9pm, should not be more expensive than Germany. At least if you can get fiber deployed without superfluous fees enacted by NIMBYs. E.g., along other occasions where the street get's dug up.
Comcast makes $5 per subscriber in profits per month. Netflix with $12 per month revenue might end up making $5 in profits pretty soon. That is all that matters.
Also Netflix is not a Comcast competitor. Healthy Comcast network helps Netflix too. It is like saying SpaceX is bigger than Disney. Comparison makes no sense.
Netflix is not gonna hurt cable as much as ipod did not hurt FM radio. So I think people need to take a chill pill.
For a few of us with non cable pure internet ISPs at least, we really are cutting the cable. I use Webpass in SF, which does building to building microwave beaming and gigabit fiberoptics and that’s it... it’s plain and simple internet without TV or service bundling of any kind. Big cable hasn’t received a penny from me and if I can help it, never will.
Comcast owns NBC and bunch of cable companies. If you watch any of the networks they own or if you wtch anything produced by Universal, they are still making money from you.
One difference with cord-cutting vs. Comcast (et al) is that I have no idea how to watch sports on broadcast unless I come across it randomly channel surfing.
That is, for me, it's not about money so much as control over distractions in my home. People have been clamoring for a la carte cable for years if not decades, and since the cable services either decline or are unable to provide this, technology finds a way.
The $5-10 (or whatever) per subscriber that ESPN gets in kickbacks is commercially offensive to me (and who knows how much they get from home shopping providers), but if there's a way where I can avoid that whole thing, well that's worth the same amount I might otherwise give a cable company that would just as soon shovel a bunch of garbage I don't care about into my programming guide.
My solution to this is to realize that this is exactly why modern broadcast sports even exist; as a means to make money. All of the rivalries, drama, and theatre around it exists to reinforce the idea that you must watch to see who wins the Big Shiny this season. This ruins the fun of watching skilled humans competing in a game for me; they might as well have Slurpee straws as sticks, Oscar Meyer hotdogs as skates, bat around a Coke bottle into a Doritos net while skying over a giant Chipotle burrito with 14 different LED screens showing various logos. We’re not far off from this right now; big sports is an assault of advertising on the senses, and people PAY to go, clamor for “access” to watch it on TV, put up with hostile “blackout” policies, and buy tons of memorabilia. If we could get that many people to care about something that actually mattered, the world would be a better place. I really hope that my generation ends up killing this brand of professional sports.
One difference with cord-cutting vs. Comcast (et al) is that I have no idea how to watch sports on broadcast unless I come across it randomly channel surfing.
In 2018, why the heck is it that I can't click on something to indicate, "I want to watch this," then I get a notification when it airs, and have a list of shows/events now available to watch? If media companies want their advertisements to be worthwhile, why don't they get their act together and do this?
A la carte cable was a "grass is greener on the other side" thing. People asked why they pay $60 a month for 100 channels if they only watch a handful.
Now you can buy Netflix, Hulu, HBO, CBS All Access, Disney whatever, etc. each for $10 a month. You still end up paying $60 a month, but now you get six channels instead of 100.
You still end up paying $60 a month, but now you get six channels instead of 100.
And 94% of Comcast channels are trash. I have no problems with people who subscribe to Comcast based on the number of channels they carry, though. Personally, I don't need hardly any of them.
There’s also the difference of OTT services showing less ads, letting you watch what you want when you want, and having much more variety than a single channel. It’s not a valid comparison.
This isn't really true at all. When I had Comcast, I used their streaming website, which provided on demand access to any channel on their lineup you were subscribed to. Ad content was about on par with other online services.
My new ISP relies more heavily on individual channel streaming sites rather than hosting their own central portal for it, but again, the on demand experience is more or less the same I was familiar with from Hulu, CBS All Access, and other online sites I've used.
In fact, if there is any issues with the comparison, it'd be that a real TV service will let you watch things live if you want to, whereas streaming sites often won't carry something until the day after. And if you get a DVR, you can hold live TV almost indefinitely, whereas on demand services tend to expire shows after several weeks.
Hulu and CBS All Access have an ad free tier. I had CBS All Access when I had Sling but DirecTVNow has all of the networks live in my market (NBC,ABC,CBS, Fox, CW) I could deal with the ads and awful on demand features of DTVNow for the one or two shows I watch on CBS. For everything else I have Hulu and the Cwl
I still contend that in many ways, traditional cable subscriptions offer more for your dollar than a pile or cord cutter products. At the very least, the competition is closer than one might be led to believe.
Funny enough: My friends who never see television ads, I sometimes feel like they miss out on a lot of meme-worthy things. Sometimes I'll reference a commercial (like Grammarly, which is pasted all over YouTube), and people don't know what I'm talking about. It's weird. As annoying as ads are, they've become a significant part of our culture and it's odd when people don't see them.
Imagine if you happened to not know what the Geico gecko was or have heard the commercial from which the pronunciation "diabeetus" came from.
I'm a cable cutter (I refuse to call myself a cord cutter), but I agree. I would have Netflix regardless of whether I had cable or not but I wouldn't have DirecTVNow or Hulu ($47/month) even with the bogus fees and when you consider the bundled discounts, cable is not a bad deal for most people. My dad came up and he fell in love with my Roku TV so I got him one for Father's Day. I had to go down and set it up for him because between the individual TVAnywhere logins, the flaky WiFi (they have both slow DSL and cable internet service long story), it was really confusing for him.
On top of that, they understand when cable goes out it just happens. But if thier internet went out and they couldn't watch TV, they would be really frustrated. Besides they live in a small town with a 150GB cap on thier DSL and a 300GB cap on thier cable internet. My family blew right through that when we stayed with them for the summer.
Not sure this is a fair comparative metric. One could argue that filtering on theme (crime dramas, docs, etc.) are effectively channels. More accurate comparison would be content count or hours of programming. I've not had cable in 3 years and between HBO, Netflix, and Amazon I don't ever feel like I'm at a loss for content.
And all of the networks offer most of their content free on the web a week after it airs without signing in, in the case of CW, within a day.
If you add the corresponding channels to Plex, you can watch them without commercials. Plex channels scrape the content from the official web channels in real time so while the networks may not like it, to the websites it looks just like you are viewing it on the web so it wouldn't be considered "piracy"
Are you confident this is still the case? I was watching CW shows on their website this week, and had to sign in with my cable provider to stream the full episodes. I've seen this as fairly hit or miss.
Or TiVo, or the internet. I'm not sure how this is different from how you watch sports on cable unless you come across it randomly. Either way you need to find a schedule somewhere?
I would think delivering content over the internet point to point would be more expensive than cable since cable is multicast. Netflix has higher marginal cost and Comcast has higher fixed costs that can be spread among more customers.
Comcast has to constantly transmit all the channels, no matter who's watching. And their fixed costs are rather large. How many thousands of $$ does it cost to put up & maintain a single street's worth of cable? And how much can you recoup from that, especially when you have a massively variable amount of money coming from each customer (including 0 for those on the street who don't subscribe). Plus the license fees for all those channels..
Netflix can also multi-home closer to their customers to reduce bandwidth costs. Comcast is stuck burying cable.
In even a moderately lower middle class neighborhood, I would think that the majority of people have cable or internet. It's not like thier is much competition.
Some apartment complexes and even HOAs force all of the tenants/homeowners to pay for internet + TV.
When I stayed in an apartment part of the lease agreement was that you had to pay $100 for a cable + Internet package and then had to pay more for extra boxes, etc. the complex racked on the minimum payment as part of rent then you paid any overage to Comcast.
We had a 300MB cap and the only way we could get internet without a cap when they first started was to get a business account. But you still had to pay the mandated $100 for cable to the apartment complex and then had to pay extra for the business account. We moved shortly afterward.
One of the requirements when we were looking for a house was that Comcast was not the only option.
It's hurting Comcast's TV business, not Comcast's ISP business. But they try to rip Internet users off to compensate for their declining TV profits (because of very poor competition and monopolistic position of Comcast as ISP in many places). That's exactly what they are doing by jacking up Internet plans prices, pushing nonsense data caps and so on.
After fees, taxes and all of the bullshit increases year after year, Comcast charges me 107$/month for 25mb (yeah, I'm not forgetting a zero). They have no competition where I am (the competitor serves across the street but won't do our building even though we agreed to fund the infrastructure).
Comcast is more or less limited to customers where it currently has cables in the ground - which is a subset of the US population. To grow its customer base, it has to lay more cable, or enter into agreements with existing cable operators.
Netflix is present in around 200 countries around the world, some of them with significantly higher population than the US, and is available to anyone with an internet connection of some description. It's very possible that the valuation is in large part because of this potential.
The mistake you are making is not taking into account forward earnings. Your reasoning may have worked in the past but tech companies and the markets these days are different. When you take forward earnings seriously, all these valuations start looking reasonable.
Why pay $40 for Netflix stock today if it’s damn near guaranteed to be a massive business in the future? You will pay $350+.
Why aren’t we paying $350+ for Comcast if it has 81x the net income of Netflix? Because Comcast is going down the shitter.
I'm not sure "cord cutting" will help Netflix as much as some may thing. Netflix is already a very popular service, and one that many subscribe to alongside their traditional cable TV service. The new batch of streaming "live TV" providers are the ones looking at massive growth. I do think Netflix will benefit indirectly as people break their "addiction" to traditional TV - but it's not a replacement for live TV (yet)
Does Netflix have a "live tv" strategy? Hulu currently offers one (although I ended up dropping it due to their hobbled DVR)
Sounds like a good time to buy Comcast stock, and/or short Netflix stock. I'm no fan of Comcast (I've been trolling my city's building permit listings, drooling over the small fiber providers inching closer to my neighborhood), but they do still own a ton of physical infrastructure, as well as a massive IP library. Netflix has branding and momentum on their side, but they're also in a much more fragile position.
All I know about Warren Buffet's investing is that he takes a lot of time to come up with a sane, realistic valuation of a company. It seems to have worked for him.
Netflix's quarterly revenue was $3.7bil representing a 40% YoY growth, and $400mil more than their previous quarter. Additionally, their net income last quarter was $290mil, not $185mil (that was the quarter previous).
Also you seem to have cherry picked quarters to compare, as last quarter Comcast actually had a net income of $3.12bil. The quarter previous was $15bil and the quarter before $2.9bil. I'm unsure what accounts for that single quarter spike, but using it as synecdochic of the whole is disingenuous at best.
Comcast's net profits per subscription is $5 per month. So Comcast on an average makes $60 profit per subscriber. I will not be surprised if Netflix would hit that goal in next 2 years or so. After all profits is what matters and not net income.
Comcast has to employ thousands of support people in India, thousands of technicians all across the USA, cut deals with city administrations, ply those cable lying vans and what not. It is sad that despite all this Herculean work Comcast gets bad rep and very little profits.
Billions of dollars of earnings per quarter is "very little profits" -- okay. If that's too little on account of costs, Comcast can feel free to find ways to reduce costs or innovate, you know, like Netflix.
Or they might start a Oil refinery or brothels in Amsterdam or a start selling aspirin ? Why do I care what they do. I am only pointing out that Comcast has huge operational and capital expenditure compared to Netflix. It is not some value judgement on who is better.
BTW Comcast has reduced its expenditure considerably by moving nearly 80% of its support jobs to India.
Valuations are based more on predictions of future performance, not based on current already known performance. The market just thinks Comcast is a falling star and Netflix is a rising one.
The market values the future not the present. Heard this argument about Amazon going back over 10 years. I've come to the conclusion that when a general consensus is that stock XYZ is overvalued, its usually a great buy.
According to those numbers, lots more people want shit, or they are willing to pay more for it.
Not sure what you're getting at.
P.S. A little thing called "sports" is compatible with shit, but not filet mignon. And after years filet mignon has make negligible progress in this area.
Also, filet mignon is shipped inside shit tubes, and probably will be for a very long time.
Shit's been around a long time. People are just learning about filet mignon. And not everyone has the equipment to have it properly prepared at home, yet. As people get that equipment, look for sales of shit to drop.
What's more shocking to me is that Netflix is worth more than Disney.
Just look at the list of Disney subsidiaries[1], then look at how bad the average Netflix original movie is and then tell me if the market caps makes any sense at all.
It's absolutely silly. One Disney movie release alone puts Netflix to shame. Unless Netflix can open theme parks and push massive blockbusters to theaters every three weeks I just don't see how they'll actually be worth more.
I get your point, and I agree with you overall, but it's not quite fair to compare Netflix movies to Disney movies. Netflix's wheelhouse in original content is TV series, not movies. IMO, they're second only to HBO in that space.
"The Walt Disney Company to Acquire Majority Ownership of BAMTech" [1].
"The company's major clients include the NHL, HBO (for its HBO Now service), the PGA Tour, Riot Games, WatchESPN, PlayStation Vue, WWE Network and TheBlaze." [2]
"Marvel, Star Wars films to ditch Netflix for Disney service" [3]
I'd say they have both the content, technical expertise, and tenacity and perseverance to pull it off.
Disney owns BamTech the streaming company behind MLB at BAT and HBO Go. BamTech is widely believed to have the best streaming technology except for Netflix.
No one has ever accused Disney of not being able to leverage its brands. They also have a good track record when it comes to acquiring other companies like Pixar, LucasFilm, and Marvel.
If the deal with Fox goes through, they will have even more content to leverage.
I believe that creating original content that attracts subscribers (the HBO model) is what Netflix is trying to make one of the main points of Netflix.
It'll increasingly be as the other content producers feel threatened by Netflix and balkanize their content into their own services. Netflix has to convert to more of an HBO model where they have their own quality originals that bring eyeballs, and they're already on their way towards that.
This, really--Netflix's big push into original content came after their deal with Starz ended and they started to have a harder time licensing movies and shows from studios and other networks, as those entities were trying to build their own services. The 'point' of Netflix is 'have enough available stuff people want to keep paying $12 a month for'.
I'm puzzled by your comment about 'the point of Netflix.' It seems myopic to think that they should limit themselves to simply serving up others peoples content. I would imaging the point of Netflix is to be the most success company they can be.
It seems incredibly short sighted too! Buy the rights to streaming a show that someone else made could, and probably tends to be far more expensive than producing your own in house content...
Plus I do genuinely believe that Netflix has been successful in creating new interesting, quality content and partnering with a variety filmmakers. Some of their docu-series have rivaled HBO's Documentaries!
This zeitgeist is exactly what cable companies still try to fight against. We no longer need content to be served whenever someone streams it; we need content available whenever we want to access it.
For this, we no longer need cable companies; we need internet service providers.
Funny. I think of Comcast as an ISP. I know they provide cable TV, and do everything they can to upsell/bundle it with their Internet access, but to me they're just an ISP.
I just checked, and it seems revenue-wise they're still more TV than Internet, but the trend is towards Internet revenue, and in subscriber-count, it flipped in 2015. I'm guessing, though, that the ISP revenue won't grow a ton, whereas the TV revenue will continue to drop.
Traditional TV cut its own throat by expanding commercial air time to the point where customers are actively looking for and consuming alternatives. Rather then address the issue of why traditional TV is being rejected, Comcast is trying to coerce its members into subsidizing TV by making their subscription bundles more competitive then simply getting an internet connection. That won't do much in the long run as people like me start refusing to pay for those extra services (TV, phone). I've already dropped Comcast for Sonic for some for these reasons.
If I was in charge of a TV network, I'd start dropping the amount of ad time during programming and start adding more time to my hit shows. I know there is an ecosystem that makes this challenging, but would you rather spend you life bailing out the water or would you rather just fix the boat?
Not to burst your bubble, but I recently ditched Comcast/Xfinity for Internet TV. I tried several providers, and found that Xfinity provided the most permissive interface for skipping commercials on my DVR recorded content.
I settled on YouTube TV, however their policy regarding commercials is even worse than Comcast.
For example, if I record something to my YT DVR, AND the show is also available "on demand" YT will force me to watch the ON Demand version (with unskipable ads), or will block me from skipping commercials on the DVR version.
Whereas Comcast restricted skipping commercials on On Demand content, they did not force me to watch the On Demand version, and did not block my ability to skip commercials.
Hulu Live TV blocks commercial skipping completely on DVR content.
People have been complaining about ad time for years and nothing happens. People from other countries think our ad duration is insane. In the US it's about 9 minutes of commercials for every 30 minute slot, so roughly 1/3rd. Plus, commercials will disrupt a 30 minute show slot 3-4 times.
You can do some analysis on iTunes. When I look up "Leave it to Beaver," which came out in the 50s?, it was 4.2 minutes per 30 minute show, so it has more than doubled. You can tell by the run time of the show: 25:38 for Beaver vs 21:00 for Pawn Stars.
Some syndicated shows have been sped up slightly and edited so stations can add more commercials.
The biggest problem wasn't commercials (didn't help) but bundling. Why should I pay ... $10/mo for MTV/Nickolodeon? $20/mo for 20 different ESPN channels?
A la carte cable offerings is what NFLX should be worried about. 10 live stations (maybe a small premium station surcharge) for a small fee will compete for the same limited number of leisure hours in a day we have on average.
The idea we could use (or want) 500 channels was always a mistake.
Only Sling offers a "lightweight" bundle akin to your description. Most start with the same 50-60 base channels (I recently tried most of them). In a few years, "Internet TV" providers will essentially morph into traditional TV providers (jokes on us!)
What Comcast doesn't mention is that when you get a TV bundle to save on internet costs the fees they tack on for TV increase the monthly bill by around 40% of the advertised rate. Bundling TV is actually more expensive when you look at the total bill but people buy according to the advertised rate vs. the actual bill.
There's no way that's true unless you live in a really messed up market, taxation-wise.
Here in the SF bay area I have gigabit internet through comcast and allow them to shove their "basic" cable TV service in my general direction (it's not even hooked up) because it 'saves' me $5 or $10 or whatever per month on my internet charges. (All I know is the total bill is $144 which is less than the advertised rate of $169 for Gigabit, but I've been through this excercise many times in the past 5 years, where I try to get JUST internet, and they offer me tv+internet for $5 or $10/mo cheaper; last time I didn't even ask for the full numbers)
Fees:
Broadcast TV Fee $8
FCC Regulatory Fee: $0.08
Franchise Fee: $2.01
PEG Access Support: $0.55
Local Utility User Tax: $1.55
State Sales Tax: $0.23
So, $12.42 in taxes and fees, only $8 of which is clearly related to broadcast TV (and here I'm assuming I don't pay that fee just by being a subscriber to a cable company, even if I get internet-only).
I plan on calling sometime soon to clarify, but I've done it many times, and it never saves me a penny.
Somewhat unrelated, just reduced my internet speed from gigabit to 250Mbps; upload down from 35Mbps to 10Mbps and it's $96.95 'before taxes' .. hopefully, at least, I won't have that $8 broadcast fee, but I'm pretty mixed about this whole thing. I only got gigabit because I could, but I might miss that upload, just a little bit. And it's only $40 per month that I'm saving. Maybe $45 tops. Still, interested to see how it pans out. And finally I get to return the damn cable box they won't let me return as long as I have TV service. And -1 subscriber count, almost worth it for me just for that alone. They tried to throw a 2 year $99 gigabit offer at me, but I keep hoping SOME day I'll get FTTH.. I know, don't hold your breath.
There is also the $10 "HD Technology Fee". If you have multiple TVs it's $10 for each additional set top box per month. I know our 6 TVs is a little extreme but that by itself would be an extra $50 a month.
Ah. I have no idea what kind of box they gave us, it just sits in the attic. I've got 3 TVs; 1x 4k and 2x 1080p but they're all hanging off the TiVo Bolt and TiVo Minis.
We're definitely not getting charged an extra tenner for an HD box.
They all do it. "Add cable to your internet connection plan for $10." Then at checkout they tell you about the $9 sports fee, the $15 local channel fee and the $5 news fee. Deception pricing is becoming all too common. Hotels with resort fees, cable with channel fees, mobile providers with number portability fees. All never included in advertised priced
There was an article a couple months ago about how fox/cbs/nbc/abc had committed to reducing the amount of commercials during regular programming. It was not an insignificant amount.
In 2018, why the heck is it that I can't click on something to indicate, "I want to watch this," then I get a notification when it airs, and have a list of shows/events now available to watch? If media companies want their advertisements to be worthwhile, why don't they get their act together and do this?
The answer is that they will try to implement this only for their own company, and this will fail. Such a thing could only succeed with a standard that everyone used.
Sure, but the fact that I have to be tethered to an expensive optional device my living room, subject to a particular walled garden to get not even the full range of this functionality is pretty backwards. Why can't I just see a random ad or review somewhere on a web browser or on my phone and have that? The fact that I'd need a DVR and that it would only work for one company's systems is backwards considering the wealth of infrastructure that already exists.
It would make total sense for Netflix to be worth more than Comcast. They provide a worthwhile service while Comcast does not. Netflix provides content, even producing some itself. Comcast does nothing but media distribution. A clever 12 year old can do global media distribution on their free time for free. And do it better than Comcast and other large corporations can. They built their empires when distribution was the hardest problem in the economy by solving that problem. Now, it's one of the most worthless problems to solve. It is right and proper that they shrink, fade, and die. If not for their stranglehold on municipal telecom infrastructure born by government favors, they would have been eliminated long ago.
All the more reasons to enforce Net Neutrality, to ensure that Comcast won't start ripping Internet users off with caps and zero rating, to compensate for declining TV user base.
