Allan Tumolillo, COO of Probe Financial Associates, who is now becoming quite well known for his radical missives believes that there maybe some dark clouds looming over Comcast. He warns people should not get too obsessed with company’s first quarter earnings, and its revenue per customer. “The issue for investors is whether the ever-increasing revenue per subscriber metric is sustainable as telco competition starts to rollout for video services,” he writes. He does make good points – Comcast’s digital TV subscriber base is “approaching near-term saturation,” while there are early signs that broadband subscriber growth has dropped a notch. “Basic subscribership is flat to declining. If growth is slowing down and the underlying core base of customers is not growing, Comcast may be faced with some limits to growth,” he says. He is not too thrilled with the prospects of Comcast’s VoIP business as well. Comcast expects to make $40 a month and get eight million subscribers in four years. I have often said that the “free-for-all” competition in the telecom space will push pretty much including cable and bells on a downward spiral. At $40 a month or $480 a year, Comcast expects around $3.9 billion in 2009. That’s more than 20% of the total VoIP projections for that year. You think that is going to happen? I don’t think it will! VoIP is a money savings play, and people will play the price game in order to gain subscribers. “Verizon has clearly stated that one of its goals in FTTP is to force down cable rates,” adds Tumolillo.
CEO Brian once made a comment about how Comcast can’t get good paid VOD content because Walmart sells so many DVDs that it can dictate to the studios what and when it makes available on VOD. If Comcast wants to keep ARPU growing, they need to solve this problem. Perhaps, they missed a good opportunity with the failed Disney merger . . .
Jesse
I am not sure if they missed an opportunity with Disney. That’s a bad content play for them, and there are many other options for them. Sony-MGM deal actually is going to work out better. They have good working relationship with TW and Viacom. I think them not owning a big giant is ultimately going to play to their advantage. Sooner or later, when the demand for VoD is phat enough, even studios will play ball, WalMart or no WalMart
I agree with you Om, I’m just not sure the market feels the same way. Another thing to consider is that Comcast’s window to be the man in VOD will close before the studios are ready to play ball.