Comcast NBCUniversal is reportedly in talks to acquire free, ad-supported streaming service Xumo from current owners Panasonic and Meredith Corp., reports Variety, citing the Wall Street Journal who broke the story last week. Xumo, who offers free TV, movies and premium channels on more than 30 streaming platforms, has been on the market for several months and has a prior relationship with Comcast, so this could be a good fit. According to Variety, Xumo and the cable giant made a deal last summer to include Xumos service on Comcast Xfinitys X1 set top cable box.
Terms of a possible deal with Xumo have not been disclosed, and none of the parties involved have commented on an acquisition. Why would a cable company want to acquire a free streaming service that competes with it? To help Comcast diversify revenue, attract potential customers and stem the bleeding for huge subscriber losses.
According to Leichtman Research Group, Comcast lost 238,000 cable subscribers during the third quarter of 2019 alone, ending the quarter with about 21.4 million cable subscribers. By comparison, during the same quarter, Comcast added 379,000 broadband customers, ending the quarter with about 28.2 million broadband customers. While Comcast continues to lose cable subscribers, it is gaining broadband customers – because cord cutters need internet service to watch their favorite streaming services, whether they are free ones like Xumo or paid premium services like Netflix and Hulu.
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By adding Xumo to its offerings, Comcast can further diversify its revenue streams, adding Xumos advertising and its white-label streaming enterprise service revenue to its coffers. This income could be sizable. In April 2019, Fierce Video reported that Xumo had 5.5 million monthly users, representing 300% year-over-year growth during the first quarter of the year. The company was hoping to quadruple time its users spend streaming by the end of 2019.
If Comcast acquires Xumo, will they combine the AVOD service with Peacock, Comcast NBCUniversals own AVOD service, set to launch this spring? Comcast cable subscribers will get to watch Peacock for free. However, cord cutters will have to pay a monthly subscription fee for that service.
In related news, in December, Comcast announced changes to its pricing. It would begin offering smaller cable packages, called Choice, at $10 and $20 per month. The packages are part of the companys Comcast Vision 2020 plan. In addition to prepackaged bundles, customers can design their own TV bundles which may include local TV channels. Equipment and premium services like internet, home security and cell phone services, will cost extra.
Along with these changes, Cord Cutters News says that Comcast will be limiting discounts and promotions for existing customers. This could reduce the number of current customers who call when their promotional pricing expires and ask for a continued discount. If customers want cheaper cable packages, they will have to sign up for Comcasts premium services for a pricing bundle.
Despite its billions in assets, Comcast is looking at the long view. It is making course corrections with its pricing to try to attract new subscribers while adding new services Peacock – and possibly Xumo – to attract and retain others. In a rapidly evolving streaming video landscape, Comcast must position itself to be competitive through acquisitions, new products and services, content licensing agreements and revenue diversification. The company perhaps waited too long to recognize that cord cutting would continue, but it has finally taken the hint and is looking at any and all opportunities to compete.