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Comcast Drops $5 Monthly Fee for Xfinity Flex Video-Streaming Set-Top for Broadband Customers

Comcast will hand out one free set-top box for broadband subscribers to access Xfinity Flex, its video-streaming product for internet-only customers, as it looks to punch up the value of its high-speed internet business.

Brian Roberts, Comcast’s chairman and CEO, announced the new strategy at Goldman Sachs’ Communacopia conference Wednesday in New York. “One of the things we said years ago when streaming started to look for viable was, video over the internet was more friend than foe for Comcast,” he said.

The move comes as Comcast continues to see solid growth in its broadband business — while the traditional pay-TV side of the house continues to decline. It’s an acknowledgement by the U.S.’s biggest cable operator that it can’t fight the cord-cutting trend, and is being forced to embrace it to some extent with Xfinity Flex.

Launched this spring, Comcast previously charged $5 per month per set-top for Xfinity Flex, which provides access to over 10,000 free movies and TV shows and online-video services including ESPN3, Pluto TV, Tubi TV, Xumo, Cheddar, YouTube, and Sky News. Users also can access subscription services including Netflix, Amazon Prime Video, HBO, Showtime and Epix.

Under the new offer, Xfinity Internet customers will receive one free Xfinity Flex box and voice remote. They can lease one additional set-top for $5 per month.

Roberts said Comcast is now focused on total customer relationships and the value it can extract from the total customer base. In the first half of 2019, he said, Comcast Cable’s overall customer relationships were up 3%. EBITDA per customer was up 5% and net cash flow was up 18%. “That’s what we’re driving our operators to focus on,” he said.

Xfinity Flex will soon add Hulu, under a deal with Disney, and next year provide access to Peacock, NBCUniversal’s ad-supported streaming product slated to launch in April 2020.

To be sure, Xfinity Flex is still a way for Comcast to try to upsell broadband-only customers to full-fledged pay TV: The box will promote the ability to upgrade to Xfinity TV on X1 from the guide later this year. “If you want to buy live TV, you can click and upgrade,” Roberts noted.

Xfinity Flex includes a personalized guide, with a new “Free to Me” destination for browsing free content and a section displaying everything new on the platform. A new grid guide compiles available live programming across networks and apps, and Xfinity Flex lets customers rent and purchase thousands of movies and shows from the digital store and access their digital lockers across platforms by pairing their account with Movies Anywhere. Flex also streams music services from Amazon Music, Pandora, iHeartRadio, and XITE.

Like others in the pay-TV biz, Comcast has felt the sting of cord-cutting. In the second quarter of 2019, the company’s U.S. cable division lost 224,000 traditional video subscribers — an acceleration versus the loss of 140,000 in the year-earlier period. The operator’s video subscriber base stood at 21.6 million as of the end of June.

At the same time, Comcast’s broadband is still booming, on pace to add more than 1 million net new high-speed internet subscribers this year. In Q2, the cable division added 209,000 net new broadband subs to hit 27.8 million (up 5% year-over-year).

During the Communacopia session, Roberts cited three megatrends globally for Comcast’s business — broadband, direct-to-consumer video services, and advanced advertising — and argued the media conglomerate is well positioned in each area.

With Peacock, the idea behind the hybrid business model of offering it for no extra cost through pay-TV affiliates and via a subscription for other consumers was, “What is our fastest way to get to profitability and do so with the least amount of investment?” Roberts said. In developing Peacock, the company also has tapped the expertise of the team behind Sky’s Now TV streaming service (after Comcast acquired the U.K. satellite operator last year).

Comcast spent around $24 billion on content in 2018, a figure that will increase this year, Roberts said. “We can repurpose some of that spending” for Peacock, Roberts said. For example, he said, some Sky Studios productions will end up on Peacock.

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