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Comcast-Charter joint venture points to new chapter in streaming wars


Brian Roberts (CEO of Comcast) and Tom Rutledge (CEO of Charter Communications),

Drew Angerer | Getty Images

You can easily ignore the announcement last week. ComcastAnd CharterTo gain national market share in streaming video distribution, they have created a joint venture. The two biggest U.S. cable providers may not be winning the long-game that could open up new opportunities in streaming video distribution.

Comcast and Charter have announced a partnership of 50/50 to promote Comcast Flex’s streaming platform in more American homes. Comcast will licence Flex to Charter and give Charter Spectrum subscribers the access to it. Comcast will contribute to the venture its smart TV business (XClass), as well as free ad supported streaming service Xumo.

Charter will contribute $900 million in the beginning to help with expenses and expand. Charter will begin offering Flex-operated products and voice-controlled remotes in 2023. Although Flex isn’t new, it almost doubles its potential installation footprint.

It appears that Charter and Comcast started their partnership many years ago. Roku, Amazon, AppleAnd GoogleWe have been creating streaming aggregation tools and software for over a decade. SamsungThe smart TVs are equipped with a built-in streaming service. Netflix revealed last week that it will be offering a streaming platform. it lost customers for the first time in more than a decadeAccording to some reports, streaming subscribers in America may have hit a peak at the moment.

Anthony Wood, founder and CEO of Roku said that it was difficult to see how the Comcast-Charter venture would succeed given all the years invested. during his company’s earnings conference call Thursday.

Wood stated that companies have had difficulty competing with Roku for streaming distribution in the past because Charter and Comcast both operate large businesses. Roku, however, is Roku’s only focus. Roku’s sole focus is streaming. No. 1 in big-screen device streaming market shareConviva Research found that Samsung was followed closely by Amazon Fire TV, Samsung, and Conviva.

Still, Comcast and Charter have a major advantage that no other streaming competitor has — technicians who enter the home.

Advantage of home court

Nearly all people and families who move into a new home or apartment need to have broadband installed. Comcast, Charter and Windstream are two of the biggest home-high-speed broadband providers in the United States.

A streaming device is used by hundreds of millions of Americans and they may not want to stop. Comcast and Charter serve more than 200 million households in the United States. Comcast CEO Brian Roberts, and Charter CEO Tom Rutledge could agree on a strategy for telling their broadband technicians that they must connect Flex devices to homes when hooking up to the Internet.

Comcast, Charter and other companies don’t currently have Flex benefits to offer consumers. Although the companies may be able to market their user interfaces, it is difficult for them to convince consumers about something that they haven’t seen. Comcast’s voice-controlled remote allows users to quickly find content among a variety of streaming services. Roku and Amazon also have remotes that can be voice controlled.

Flex can be used over any device the consumer has, so there is no reason to choose Flex. But, streaming and TVs will age. For the moment, new broadband subscribers are eligible to receive Flex boxes at no cost.

Cable is perhaps the most well-known industry in video distribution.

Bundling streaming

An executive at a smaller entertainment and media company said that they were surprised that streaming packages have not been realized.

“I don’t think there is a lot of pressure to do that.” NetflixReed Hastings, co-CEO told CNBC in 2020In that year, the company’s stock value was nearly twice as high today. While it might work in some places, we don’t see the need to do that much.

Netflix’s recent share plunge and guidance that customer losses will accelerate next quarter may be the catalyst for streaming bundles — a product that starts to resemble a smaller version of the cable bundle.

If Netflix agrees to sell a bundled product — say, purely hypothetically, with Starz, Peacock and Paramount+ — for an aggregate discount, a third-party distributor will need to sell that bundle and authenticate buyers of the bundle.

Apple, Roku Google Amazon and Amazon all could be this third-party bundler.

But the “OG” video distributors are Comcast and Charter — the cable companies. They have been selling video content bundles for years.

They are now trying to place streaming devices into the homes of millions. As it is not difficult to imagine, they might want to offer customers bundles of video subscriptions that go with their boxes.

Roberts stated that Comcast will bring the products to more people and open up new revenue streams during last week’s earnings conference call.

Rutledge stated during Charter’s earnings conference that almost all Charter customers will soon have streaming video and not cable-connected TV.

“I believe that our customer base will increase incrementally.” [Internet protocol]He said,

It won’t happen in a day. It makes Comcast’s and Charter’s JV play a lot easier. They’re playing the streaming wars long game — and hoping the end result looks a lot like Cable TV 2.0.

Disclosure: Comcast owns CNBC and is the parent of NBCUniversal.

WATCH: Comcast’s earnings results for the first quarter