Comcast builds out 'smart
home' strategy as cable shrinks
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[August 29, 2017]
By Anjali Athavaley
NEW YORK (Reuters) - Comcast Corp may be
best known as a cable company, but it is banking on remote-controlled
door locks and cameras as well as other "smart-home" offerings to
accelerate its growing home security business.
The push to diversify comes at a time when more U.S. consumers who are
dropping traditional cable television packages, or cutting the cord, in
favor of cheaper alternatives. Comcast and its rivals want to offer more
services in the home to increase their revenues and create more loyal
Comcast is already seeing traction at its Xfinity Home security service,
which launched in 2012. Subscribers have doubled to more than 1 million
in the last two years, according to quarterly results released in July.
But selling security services to consumers, which Comcast says is more
than a $9 billion market, is just part of the strategy.
The company is now turning to home automation - think standalone
features such as cameras and thermostats that can be controlled remotely
- for consumers who reside in apartments and condominiums.
The U.S. smart-home market, which encompasses devices ranging from door
locks to sprinkler systems that can be programmed to various schedules,
is expected to grow to $47 billion annually by 2020, according to
research firm Strategy Analytics.
Daniel Herscovici, senior vice president and general manager of Xfinity
Home, told Reuters that the home security industry offered certain
advantages such as low churn, or attrition, since consumers rarely
switch providers unless they move. The cost of signing up customers is
low since Comcast is able to sell to people who also subscribe to
broadband and cable services.
The company first focused on home security because it was too early in
2012 to talk about connected devices, he said. Now it is also turning to
“We haven’t reached anywhere near our full potential," he said in an
Overall, the home security and automation market is a natural extension
for broadband providers who are looking for additional ways to leverage
its existing infrastructure and workforce to sell more services to new
and existing customers. Comcast has said that 55 percent of Xfinity Home
customers become new Comcast subscribers.
But Comcast and others still face a shrinking market in traditional
pay-TV services. Six of the largest U.S. pay TV firms lost a total of
723,000 customers in the second quarter in what JPMorgan analysts called
the industry's worst ever quarterly results during the period.
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A sign marks a Comcast facility in Lawrence, Massachusetts, U.S.
January 25, 2017. REUTERS/Brian Snyder/File Photo
The big question for Comcast is whether a monthly subscription model - one that
provides a recurring revenue stream beyond the initial sale of equipment - can
take off in a market where consumers have the option of paying once for items
like cameras without the extra perks that come with an additional fee, analysts
Comcast aims to find out with a pilot program in three markets to offer a video
camera bundled with its Xfinity Internet for an additional $10 a month, a
company spokesman said. Customers can purchase up to six cameras for $99 each
and then pay the monthly fee, which includes installation, cloud storage for
video recordings and the ability to create and share video clips.
The offer is meant for condo owners and apartment dwellers who don’t need full
home security systems, but still want to keep an eye on where they live. If
successful, the pilot will likely expand this year, a Comcast spokesman said.
Vivint, a home automation company owned by Blackstone Group, says it has
succeeded selling monthly service plans for $39.99 and $49.99. The product
includes features such as an app that allows consumers to control all smart-home
functions from their phone, and professional monitoring that dispatches
emergency services when needed and customer support.
Part of the appeal to the consumer is that they can select devices to be
integrated into a single system via a curated platform, Vivint executives said
According to Strategy Analytics, Comcast has roughly 10 percent of the market
for interactive security, the category of home security that offers remote
monitoring and arming of systems, compared to market leader ADT Corp's 20
Comcast plans to get a bigger slice of that market share. In March, it bought
out its supplier of home security equipment, IControl Networks Inc, for an
undisclosed amount. The deal gives Comcast more control over research and
development capabilities and provides it with a new revenue stream as a
wholesaler to other companies in the market.
Blake Kozak, principal analyst at market research firm IHS, said Comcast has an
advantage because it is already in the home, with services like a remote control
that responds to voice commands and the X1 set top box.
"They have a lot of things going for them in terms of creating an ecosystem for
the consumer and getting them to engage,” he said.
(Editing by Anna Driver and Edward Tobin)
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