Xfinity-Netflix partnership

Part
01
of three
Part
01

Comcast Xfinity-Netflix partnership - Uplift, New Subscribers, and Churn Rate.

The partnership between Comcast Xfinity and Netflix had little or no impact on unit sales of X1 devices, likely no impact on number of new Netflix subscribers, and perhaps a small impact at reducing churn rate for Comcast and Netflix.

X1 DEVICE SALES

Comcast announced on November 4th, 2016, that they would be launching Netflix to their X1 customers. This meant that anyone with X1 would be able to seamlessly access their Netflix accounts through the service. In order to understand how X1 device sales were impacted by this partnership I searched for data on unit sales prior to the partnership and afterwards.

First, I searched through Comcast's financial reports to find figures specific to unit sales of X1 devices over the last few years. Unfortunately, Comcast do not release the details of unit sales specific to their X1 product (e.g. looking through their 2017 annual report). I also looked for other figures that would allow me to calculate this figure, for example I looked for revenue split by product type (e.g. revenue specific to X1 sales). However, Comcast did not post this and nor was this available elsewhere. Their annual report did show a breakdown between video, internet and voice customers, however, we do not know what segment of video customers have X1 over the years.

Although in terms of total video revenue we can see how this increased very little between 2016 and 2017. Suggests that there was limited uplift in X1 sales after the partnership, as this would have driven growth in this area.

I then attempted to calculate this figure in another way, by looking at the increase of subscribers who have X1. I was able to find that just before the partnership, 45% of Comcast's 23 million homes had the X1 box, that's 10.35 million boxes. In addition to this, 10 million also had the X1 voice remote. After the partnership, in 2017 Comcast reported that roughly half of their video subscribers have X1. This totaled to around 11.25 million customers in 2017. That shows an increase of sales of 0.9 million X1 devices over the year after the partnership occurred.

However, data is not available for the previous years to help illustrate whether this was a slowing down or increase in sales of the product. Therefore, we cannot know for sure whether the partnership helped increase sales. However, a jump in 0.9 million sales does not reflect a large amount, given that Comcast have over 22 million video subscribers in total. For this reason we can estimate that whatever impact the partnership had on sales of X1 devices, if any at all, was slight.

NEW NETFLIX SUBSCRIBERS

Netflix has shown slow growth in new US subscribers which does not appear to have been dramatically impacted by their partnership with Comcast. While their customer base has grown, this is mostly due to an increase in their international customer base. Whereas their growth in US customers from 2012 to 2018 has shown just a slow and steady growth. For example, growth from 2015 to 2016 amounted to an increase of only 11.1 million subscribers in the United States. There was very little increase in subscribers in the United States after the partnership of 2016, and only 8 million new subscribers were reported in the United States from 2016 to 2017. This suggests that the partnership with Comcast had little impact for Netflix in terms of numbers of new subscribers.

CHURN RATE

I first searched for specific churn rates reported before and after the partnership. I looked through online articles, news stories, industry reports, academic articles and statistics databases for this information. However, I can confirm that exact churn rates for recent years are not published online. I suspect that this data remains accessible only to those within the company.

However, I was able to find related data to help understand whether churn rates have increased or decreased since the partnership. Firstly, before the deal, Comcast had reported losing many customers in recent years. It lost 4,000 cable customers in the second quarter of 2016, following a loss of 69,000 subscribers in the second quarter of 2015. In 2017, we see than Comcast are still reporting loss of TV customers (33,000 lost in the forth quarter of 2017), but have seen an increase in internet users.

However, these losses seem to be from TV areas not connected to their X1 subscribers, as the company reports that X1 churn rates were lower than industry average in October 2017. In addition, in the same year the company told us “We expect ongoing churn reductions as Netflix adds more U.S. pay TV integration deals and as X1 penetrations rise.”"

Finally, I also found that Netflix has also reported to be benefiting from lower churn rates thanks to their partnership with Comcast.

CONCLUSION

To sum up, the data hints that sales of X1 devices have been minimally impacted, if at all, by the partnership between Comast and Netflix. The number of Netflix subscribers is also unlikely to have been impacted, as research indicates there were only 8 million new subscribers between 2016 and 2017, which is actually a decrease from the previous year's annual growth. Finally, I have found evidence to suggest that churn rate has been reduced for both companies involved as a result of the partnership.
Part
02
of three
Part
02

Xfinity-Netflix partnership - Net Promoter Score, Business Goals for Both Companies, Achievement.

We have utilized trusted media sources, press releases, and analyst reports researching the partnership between Netflix and Comcast Xfinity. In addition to locating the NPS score for these companies, we have also analyzed their goals surrounding the partnership, as well as how they have progressed on these goals thus far.

Overall, our research findings have concluded that Netfliix has entered into the partnership in order to gain new subscribers, which they have succeeded in doing, according to their Q4 2017 report. Comcast has entered into the partnership with the purposes of retaining customers and improving customer experience. While it seems they are still actively working to improve customer experience, they have lost thousands of video subscribers since the partnership began. Despite this, the partnership has eased competition between these two companies.

Below, you will find a deep dive of our findings.

net promoter scores

We utilized analyst reports to gain insight regarding the Net Promoter Score of Netflix and Comcast. There is no Net Promoter Score for Comcast Xfinity X1 specifically, which we determined after exhaustive research through trusted media outlets and other reports which list NPS.

NETFLIX:
Netflix's estimated Net Promoter Score is -3.
Netflix's NPS in percent, based on an 11-point scale is 63%.

COMCAST:
Comcast's estimated Net Promoter Score is -7.
Comcast's NPS in percent, based on an 11-point scale is -55%.

business goals surrounding partnership

This partnership provides many added benefits for customers. First, the results of this partnership will allow X1 customers to open the Netflix app using voice command technology and the X1 remote. Second, the partnership will combine the Netflix library with Xfinity's existing database of on-demand videos. Third, the combined libraries mean that all the seasons of the same show (past seasons and current seasons) can be accessed by customers in one central location, as Netflix may house the previous seasons, and Xfinity houses the current seasons. Based on these findings, we assume that improved customer experience is likely one of the key reasons for this partnership.

Additionally, Netflix has been experiencing a slow down in subscriber growth in their U.S. segment. In the first part of 2016, Netflix posted a 32% decline in the number of new subscribers as compared to the same period in 2015. Therefore, we assume Netflix is seeking to benefit from this partnership in the form of increasing the rate of new subscriptions. This idea is further supported by the fact that Xfinitiy subscribers increased by 170,000 during 2016, during the same period that Netflix slowed down. This partnership meant that Netflix had the potential to increase its subscriber base by between 4 million and 5 million.

An article published by Forbes suggests that Comcast and Netflix both benefit from this partnership as they are able to join forces rather than try to compete against one another. This is especially true for Comcast, which has suffered a blow by losing traditional television subscribers resulting from the trend of consumers switching to other types of video platforms. Comcast has certainly lost customers to Netflix in recent years. By entering into this partnership, Comcast is likely looking to retain their existing customer base.

goal progress

While information pertaining to this partnership's progress thus far is limited, we were able to locate some very insightful details surrounding the progress of the aforementioned goals and benefits.

For instance, Netflix has recently announced that it crushed its 2017 Q4 new subscriber expectations with 8.3 million new subscribers for the quarter, which represents record growth for the company.

As a result, the price of Netflix shares went up "more than 9% in after-hours trading." Despite this, Comcast has not fared nearly as well: the company lost 33,000 video subscribers during this same quarter.

However, it appears Comcast was successful in boosting the customer experience for Xfinity customers. For example, Xfinity customers were given free access to Netflix during Comcast's binge-watching promotional event, Xfinity Watchathon Week.

Additionally, the partnership appears to have paved the way for other on-demand video competitors to partner with Comcast. For example, YouTube recently announced a similar partnership in 2017 which will add YouTube to the Xfinity platform, alongside Netflix. We assume this addition will also clearly boost the Xfinity customer experience.

The partnership has also done a lot to soothe the pain of competition between Netflix and Comcast, as only a few years ago, Netflix and Comcast were not on friendly terms. Fast forward to February 2018, and the Comcast CEO has stated that the two companies now have a "nice relationship."

conclusion

In closing, we have analyzed the partnership between Comcast Xfinity and Netflix, including analyzing the NSP scores of these companies, the goals of the partnership, and the progress of these goals thus far.

Overall, by entering into this partnership, Comcast was looking to improve their Xfinity customer experience in order to retain customers, while Netflix was looking for new subscribers. The most recent results show that Comcast is continuing to imorove customer experience, however has lost thousands of video subscribers, while Netflix has been able to exceed their goal for acquiring new subscribers during the same period.
Part
03
of three
Part
03

Xfinity-Netflix partnership - Similar Partnerships and Results.

Our research discovered two deals similar to the Comcast Xfinity / Netflix partnership: NBCUniversal's Telemundo content deal with Vice Media and the TBS / TNT team-up with Mashable to co-develop and distribute video content. Below you will find a deep dive of these findings.
A NOTE ON METHODOLOGY
Our primary source proved to be an Adweek article on partnerships between big digital video companies and TV networks, which provided both of the examples that we present below. Not being satisfied with only two, we conducted a thorough search for more examples, and while we located several other partnerships that we considered for a time, we ultimately rejected them, either for lacking the vital component of creating new content or for creating new content only in the context of an advertising campaign. We will therefore focus on giving a thorough overview of the two deals that are within the scope of the question.
NBC'S TELEMUNDO AND VICE MEDIA [3,7]
On May 19, 2017, NBC's Telemundo and Vice Media announced a new exclusive content partnership. "The partnership entails co-production of original documentary segments for Telemundo News and a one-hour hosted weekly show for Universo," called Universo Vice. "Both programs are expected to debut in the fall," and to include documentary segments that "focus on a wide range of topics such as music, culture, food, the environment and migration" with an emphasis on "immersive journalism," in which the journalist gets personally involved in the story. So, for example, the first episode of Universal Vice "explores topics such as oil theft in Mexico; money counterfeiting in Lima, Peru ... and the rising trend of young Latinos taking on sugar-daddies."
Both partners bring their particular strengths to the deal: "Vice benefits from Telemundo’s influence and reach in the U.S. Hispanic community, while Telemundo profits from Vice’s innovative approach which has made it popular among millennials." Young Latinos are an attractive market, comprising 20% of the Millennial market.
TURNER TEAMS-UP WITH MASHABLE
In March 2016, Mashable closed on a $15 million investment round which was led by Turner Broadcasting, owner of both TBS and TNT. "Under the deal, Turner’s TBS and TNT will work with Mashable to co-develop and distribute video content and team on cross-platform ad sales packages." This Series C round brings Mashable's investment total to $46 million; Mashable has declined to comment on its current valuation. Time Warner, Turner's parent company, had previously also invested in Mashable.
Turner's Chief Creative Officer Kevin Reilly states, "We’re confident our partnership will increase the cultural relevance of Turner and Mashable content across all of our platforms." Mashable says that it plans to "use the new funding to expand video production across all platforms including linear TV, as well as invest in its technology, data and advertising platforms," while collaborating with Turner on programming, advertising, and technology.
CONCLUSION
NBCUniversal's Telemundo's deal with Vice Media and Turner Broadcasting's $15 million investment in Mashable are similar in scope and result to the Comcast Xfinity / Netflix partnership, with both leveraging the strengths of each partner to bring new creative content to their audiences.

Sources
Sources