Comcast has a genius way to get cord cutters to start paying for cable

Game of thronesdevan josephAidan Gillen in HBO’s ‘Game of Thrones.’

You could think of the latest offering from Comcast as kind of like a gateway drug — once you try it, you’ll get hooked, and then you’ll come back to Comcast for more.

It’s called Stream, and the company generated lots of headlines earlier this week when it announced it in a blog post.

That’s because with Stream, you’ll be able to get TV service from Comcast without having a cable box, something that hasn’t been possible before. It doesn’t require a contract or any special equipment, you can quit at anytime, and no technician will need to come to your home to install anything.

“We want to make ordering Stream as easy as buying a song online,” Matt Strauss, the executive vice president and general manager of video services at Comcast, wrote in the blog post. “And make tuning in to a show as simple as opening an email.”

But Stream is also a genius way to get cord cutters to start paying for cable.

In case you missed it earlier this week, Stream is a $US15 per month app that allows people to watch broadcast networks like ABC, NBC, and CBS, as well as HBO, online. For now, it’s limited to mobile devices like smartphones and tablets as well as PCs, but the company is planning on making it available on TVs, too.

(If you want to watch HBO on your TV, using something like Apple TV, a Roku player, or Chromecast, you can just use the HBO Go app, which is included as part of a subscription to Stream.)

Game of thronesHBOEmilia Clarke in HBO’s ‘Game of Thrones.’

Stream is only available to people who already get their broadband internet from Comcast. The company will test it out in Boston, Chicago, and Seattle, and plans to release it in all of its markets by early next year.

Here’s the thing — $US15 per month is actually a pretty good deal for people who already pay Comcast for Internet. After all, HBO Now, HBO’s standalone streaming service that the company announced to much fanfare earlier this year, is $US15 per month.

With Stream, you get to watch HBO and broadcast networks, as well as access to Xfinity Streampix, Comcast’s streaming video service. You also get 20 hours of a cloud DVR, so you can record shows online and watch them later.

Stream in ipadComcastWhat Comcast’s new app Stream will look like on an iPad.

The caveat is that because of programming rights, you can only stream live TV when you’re in your home and connected to your Comcast WiFi network. Comcast says, however, that by the end of the year, you’ll be able to watch live network broadcasts outside of the home, at least in some markets. With Stream, you can also watch on-demand programming and what you’ve saved on your DVR when you’re out of your house.

But the company doesn’t plan on you keeping Stream forever. Comcast thinks that people who subscribe to Stream will likely upgrade to a more expensive service later.

Comcast is targeting the growing number of people, especially young people, who stream video online instead of paying a cable or satellite company for a traditional, and expensive, bundle of channels. The number of these cord-cutting households, who subscribe to broadband but don’t pay for traditional TV, grew by 16% between 2012 and 2014, to 10.5 million, according to SNL Kagan, a media research firm.

Strauss told Business Insider in an interview earlier this week that he believes that when it comes to TV and video, people in different stages of life want different things. When you’re just out of college and in your twenties, broadband internet and subscriptions to Netflix and HBO might satisfy your entertainment needs.

But later on, when you start to make more money, and perhaps buy a house or have kids, you may want — and be more willing to pay for — more.

“The challenge for us is how do we build a relationship with that segment earlier on in the life cycle with the belief that over time they will see more and more value in the products and services that we offer,” Strauss said.

Comcast has good reason to think this will work — the company has found that many people who buy Comcast’s “Internet Plus” package, a so-called “skinny bundle” of local TV channels, broadband, and HBO, that starts at about $US45 per month (not including equipment, installation, and fees, of course), end up upgrading to bigger, more expensive packages.

Comcast also has its technology going for it. The company hasn’t released Stream beyond a small test group yet, but it will probably be a good app. Comcast has invested a lot in trying to shed the image of the old fashioned cable company, and also to create user-friendly technology, not just in its apps but also in its X1 cable box.

Cloud TV ListingsComcastThe Xfinity TV app, which currently allows X1 DVR customers with cloud services to stream live TV, on demand, and recorded shows.

At an investor conference earlier this year, Brian Roberts, Comcast’s CEO, said that his company has as many software engineers as Facebook.

So Comcast hopes that a Stream subscriber gets a taste of Comcast, and not only finds that technology is is easy to use, but also wants to watch more than just the broadcast networks and a premium channel, and wants to record more than just 20 hours on a DVR.

Comcast will likely make it very easy to upgrade.

It’s a grand experiment to combat the cord cutting trend. We’ll just have to see if it will work, especially as more and more streaming options become available all the time.

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