4. 39
42
44
46
21.0% 22.2% 22.7% 23.0%
2012 - A 2013 - A 2014 - F 2015 - B
68
71 76
81
34.5% 35.8%
37.4%
39.3%
2012 - A 2013 - A 2014 - F 2015 - B
59
62
63
65
69.0%
74.3%
79.2% 82.4%
2012 - A 2013 - A 2014 - F 2015 - B
85 83
80 78
43.1% 41.4%
39.0% 37.6%
2012 - A 2013 - A 2014 - F 2015 - B
Residential Telephone Customers & Penetration of HP
(in thousands, except %)
Digital Customers & Penetration of Basic
(in thousands, except %)
Residential HSI Customers & Penetration of HP
(in thousands, except %)
Basic Customers (Incl EBUs) & Penetration of HP
(in thousands, except %)
5. 11
16
23
29
15.7%
22.3%
30.4%
35.2%
2012 - A 2013 - A 2014 - F 2015 - B
42
49
55
60
71.7%
80.3% 86.7% 92.7%
2012 - A 2013 - A 2014 - F 2015 - B
DVR Customers & Penetration of
Digital Customers
WiFi@Home Customers &
Penetration of Resi HSI
Customers
HDTV Customers & Penetration of
Digital Customers
(in thousands, except %) (in thousands, except %)
(in thousands, except %)
25
26
26
2542.6% 42.8% 40.3% 38.2%
12.9%
26.8% 32.9%
38.8%
2012 - A 2013 - A 2014 - F 2015 - B
DVR Customers DVR % of Digital Customers TiVo % of DVR Customers
7. Gross margin shift continues. Overall product gross margin share
has shifted from the lower margin video products to the higher-
margin HSI and telephone products.
53%39%
8%
2010
Video
HSI
Telephone
35%
53%
12%
2015
8. Most of the customer relationship growth is
coming from Internet only
Accelerating Customer Relationship Growth Trends
2009 2010 2011 2012 2013 2014 2015B
8,900
4,000 2,800
9,000
32,400
38,100
(8,500)
9. A typical/Efficiently-operated MSO
◦ ARPU per basic customers are increasing (e.g., 8%
growth YoY) $178.00
◦ Comcast- expects revenue trend to increase in high
Speed Internet with a forecast ARPU to be north of
$60.
Demonstrates the need for speed and
connectivity.
The use of multiple devices and the higher
penetration of smartphones are boosting the
overall demand for high-speed Internet.
11. Targeted to cord-cutters to keep video in the home
Can attract a lower economic customer
Recent results of the Skinny Bundle test:
◦ Overall, 38% of those choosing these offers back in Nov/Dec have disconnected with an average
lifespan of 2.87 months.
◦ 93% of those disconnecting were non-pay.
Offer was: Limited and 30 Meg Internet for $40 and Limited and 30 Meg Internet and
Phone for $45
Despite poor results still considering “ Skinny Bundle” at $50 price point to include 50 Meg
for $50 plus digital equipment, Wi-Fi, speed upgrades and premiums
Disconnect reason % Double % Triple Total
Non Pay 57% 43% 93%
Voluntary 100% 0% 7%
Total 60% 40% 100%
% Disconnect of total sold $40 2X $45 3X Total
Total 47% 30% 38%
Average life of disco'd accts 3.17 2.42 2.87
12. Positioned as a Pay TV service for customers
who do not want to pay for TV
◦ Common theme-attracts lower end customers
◦ Starts at $20 per month
Targeted to cord cutters and cord nevers
◦ Traditionally easier teasers to get customers in the
door with exploding rate increases (e.g., common
strategy for Satellite)
DISH Network’s option has no DVR option
◦ Still requires Internet subscription from cable or
Telco. Satellite does not solely own the customer
relationship.
13. Each MVPD has its own strategy
◦ With tougher programming negotiations and
channel drops, skinny bundles become an option
for customers to use Internet speed allowances for
additional video enjoyment (e.g., Netflix, Hulu, in
the light of speed increases) while keeping the PSU
relationship of video in the home.
“Skinny Bundles” touted as being “Big” for TV,
but Comcast Says Sales Have Slowed.
◦ Comcast strategy is to get customer into
fatter/more robust bundles.
15. What is this Box?
The X1 is more than a cable box, it’s an entertainment
operating system that allows you to turn any TV into a
smart TV.
Phones are TVs and TVs are phone
X1 is a first of its kind entertainment operating system
that merges entertainment and customer lifestyle.
X1 combines customized apps, social media features and
traditional video services to deliver a TV entertainment
experience.
Boasts enhanced apps (e.g., Facebook, Instagram,
Pandora, Sports and Weather)
As of January, 2014, X1 is available in 100% of the
Comcast footprint.
16. Strengths
Double Play bundles includes premiums (some bundles/Sports Prog)
Enhanced apps (e.g., Facebook, Instagram and Pandora)
Content based on what’s trending on twitter (live content)
Lifestyle applications
Developed internally, operationally not reliant on box vendors
Price Point is attractive
Focus is on Internet 50 Meg service
◦ Double play bundles starting at $79 for 12 months with 3 year agreement
◦ Rate increased with more Internet speeds
Strong likelihood of other MSOs white labeling, as X1 is a brand for an operating
system that is keeping pace with other devices (e.g., iPads, Androids, etc.)
17. Weaknesses
Speed to market versus devices like Apple TV and other devices
◦ Cable trying to keep up with other devices that is more than just a
phone, iPad or Android
Product offering will not be the same across all MSOs/loses
competitive edge against satellite
Other MVPD will be slow to adopt
◦ Capital constraints
◦ Cost of box versus incremental charge for the box
◦ Developed Internally
Strong likelihood of other MSOs white labeling, as X1 is a brand for an operating
system that is keeping pace with other devices (e.g., iPads, Androids, etc.)
18. Big win for Charter, but could hurt other
MSOs who have a different strategy.
Data caps provide a new revenue stream, in
the light of programming costs increasing
and video subscriber growth decreasing
Customers are accustomed to caps
19.
20. Video consumption continues to decrease
Consumers chose satellite for programming
and affordable option versus cable
Programming costs continue to increase YoY
Pricing trends (entry prices) continue to
decrease
Volume compensates for rate
Increase rates can be set on the improved
Internet product (speed increases)
21. New Acquisition
Q1 Q2 Q3 Q4
Single Play - Video 65.00$ 65.00$ 65.00$ 65.00$
Single Play - HSD 35.00$ 35.00$ 35.00$ 35.00$
Single Play - Telephone 50.00$ 50.00$ 50.00$ 50.00$
Double Play - Video & HSD* 89.00$ 89.00$ 89.00$ 89.00$
Double Play - Video & Phone 90.00$ 90.00$ 90.00$ 90.00$
Double Play - HSD & Phone 49.00$ 49.00$ 49.00$ 49.00$
Triple Play* 99.00$ 99.00$ 99.00$ 99.00$
Upgrade
Q1 Q2 Q3 Q4
Video 29.00$ 29.00$ 29.00$ 29.00$
HSD* 45.00$ 45.00$ 45.00$ 45.00$
Telephone 10.00$ 10.00$ 10.00$ 10.00$
*Assumes all Double Play and Triple Play customers take 30 meg internet.
Single Play HSD,
affordable price point =
higher HDS take rates
22. 2013
Actual
2014
Forecast
2015
Budget
'14 vs. '13
Net Change
'15 vs. '14
Net Change
Video Only 18.6% 12.4% 10.0% -6.3% -2.4%
Internet Only 20.7% 25.7% 29.3% 5.0% 3.6%
Phone Only 0.8% 0.7% 0.7% -0.1% -0.1%
Video & Internet 30.3% 31.4% 31.6% 1.1% 0.3%
Video & Phone 4.1% 2.7% 2.7% -1.4% 0.0%
Internet & Phone 4.2% 3.8% 3.6% -0.5% -0.2%
Video, Internet & Phone 21.2% 23.3% 22.0% 2.1% -1.3%
Total Relationship Connects 100.0% 100.0% 100.0% 0.0% 0.0%
Single Play 40.1% 38.8% 40.0% -1.3% 1.2%
Double Play 38.7% 37.9% 37.9% -0.8% 0.1%
Triple Play 21.2% 23.3% 22.0% 2.1% -1.3%
Growth in Internet only and
Single Play
23.
24. Limited Telco Competition
• Verizon FiOS 0.0% of homes passed
• AT&T U-verse 5.5% of homes passed
• Total broadband overbuild 9.5% of homes passed
Clustered Markets,
Favorable Competitive Dynamics
Satellite still major competitor versus Telco
Rural MSOs less than 6% of homes passed
Urban areas experience higher Telco competitive
overbuild, due to cherry picking more affluent
areas.
25. ◦ Launched Netflix on TiVo (largest MSO at
the time)
◦ 87% of HSI residential customers have
download speeds of 15 Mbps+; 47% have 50
Mbps+
◦ Operation GigaSpeed introduced 150 Mbps –
300 Mbps in nearly 30 cities
Positioning for OTT
o Launched Operation GigaSpeed
• $230 million 2014-17
• 1 Gigabit speeds to cities with ~90% of our
customers
• Available to all customers in those cities, not
just a few
26. Positioning for OTT
Extend “Market Share” Gains
◦ Focus on satellite switches
◦ HSI growth initiative
◦ Enhance eCommerce experience to drive sales
Capitalize on Operation GigaSpeed
◦ Internet speed increases and bandwidth reclamation
◦ Flagship speed of 50 meg, moving to 100 meg and beyond
◦ Force competitive speed comparisons with “Speed Test
Challenge”
Enhance best broadband pipe into the home
and office
◦ CMTS investment – increase capacity 3 times
◦ Backbone and regional network enhancements
◦ WiFi core infrastructure upgrade
◦ Continued node splits
Video Network
◦ Continued enhancements to TiVo “”2GO
◦ VOD storage upgrade – 30,000 hours
