Comcast is using its broadband connections with residential customers as the foundation for its burgeoning smart home business.
The cable operator is one of several diversifying into new markets to augment traditional lines of business, now that margins on pay-TV, landlines and DVRs are under pressure from over-the-top providers and cell phones, Daniel Herscovici, senior vice president and general manager of Xfinity Home told Reuters. Security services have lower churn than pay-TV since customers typically stick with providers unless they move, and it's cheaper and easier to sign on existing broadband subscribers to new services, he added.
While security is not new to Comcast, the operator is making more of a concerted effort to sell the smart home service to current subscribers to its broadband offerings, said Herscovici.
Recognizing the huge potential and customers' desire for simplicity and control over myriad devices from multiple vendors, Comcast wants to become subscribers' partner for much more than Internet connectivity. Although its Xfinity Home security service launched in 2011, it reached the 1 million customer mark in the past two years, according to the quarterly report released in July 2017. And now Comcast wants to help residential customers manage their Internet of Things (IoT) network, it said.
"As we look beyond the second quarter, we see so many opportunities for continued growth in our cable business, with significant runway ahead in broadband, robust growth in business services, attractive opportunities driven by our differentiated approach to video, and upside in newer offerings like Xfinity Home, all these services enabled by an ever-increasing digital service experience," said Brian Roberts, chairman and CEO of Comcast, during the quarterly presentation.
This gives Comcast and other MSOs new ROI opportunities for their infrastructure investments. Consumer interest in (and spending on) smart home solutions continues to tick upward: There will be 73 million smart homes in North America by 2021 and 80.6 million in Europe, according to Berg Insight. Smart homes will represent a $47 billion market by 2020, according to Strategy Analytics.
Comcast is using its investment in DOCSIS 3.1 as the basis for more digital services for home users, encouraging residential customers to subscribe to its new home WiFi platform, xFi, that allows them to create their own network to power and manage the growing number of connected devices, including smart home gear.
"We're just introducing a new advanced wireless gateway that can get you up to 1 gig WiFi speed. So it delivers great coverage in the home," said David Watson, president and CEO of Comcast Cable and senior executive vice president at Comcast Corp, in the second-quarter earnings call. "And it gives for the first time -- one of the pain points for customers -- the ability to connect just an ever-increasing amount of wireless devices in the home and let you simply and easily manage all of that within your home."
— Alison Diana, Editor, UBB2020. Follow us on Twitter @UBB2020 or @alisoncdiana.
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