Comcast builds out 'smart home' strategy
as cable shrinks
Send a link to a friend
[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.
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 said.
[to top of second column]
A sign marks a Comcast facility in Lawrence, Massachusetts, U.S.
January 25, 2017. REUTERS/Brian Snyder/File Photo
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
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 percent.
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
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)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.