New Support Service from Comcast Could Bolster Market Share

Comcast (NASDAQ:CMCSA) is the biggest U.S. cable provider with a nearly 21% market share of the U.S. pay-TV market. Comcast competes with satellite pay-TV providers like Dish Network (NASDAQ:DISH) and DirecTV (NASDAQ:DTV), cable companies like Time Warner Cable (NYSE:TWC), and telecom operators like AT&T (NYSE:T) and Verizon (NYSE:VZ) in the pay-TV and broadband businesses.

Our price estimate for Comcast stands at $29.57, implying a roughly 20% premium to market share.

Comcast recently announced the launch of its Xfinity Signature Support service, “a new 24×7 technical support and equipment protection program for the growing number of home electronics devices – like laptops, home networking equipment, gaming consoles, Wi-Fi enabled smart phones and tablets – people are connecting to Comcast’s services”. ^[1]

The company also noted in its press release:

“This service offers customers a single source for troubleshooting and support for their computers, home networks and many other devices and is another step in the company’s focus on delivering an end-to-end exceptional customer experience backed by the Comcast Customer Guarantee.  The new offering enables customers to select an enhanced level of technical support with monthly subscription plans and one-time support options and is offered in addition to the 24×7 support Comcast already provides for its video, high-speed Internet and phone services.” ^[1]

For clarification, readers should note the difference between the Xfinity Signature Support service and Comcast’s Fancast Xfinity TV, which is an on-demand TV service that enables its subscribers to watch several TV shows and movies over the internet.

So how does the introduction of the new, branded ‘Xfinity Signature Support’ service affect Comcast’s profit outlook?

Perception of Advancement to Stop Subscriber Defections

Ultimately Comcast wants to stop the decline in its pay-TV market share that it has been experiencing over the past few years, due in part to competition from other providers as well as dissatisfied customers. We estimate that Comcast’s pay-TV market share has fallen from 24.4% in 2007 to 21.5% in 2010.

While  the launch of Xfinity on-demand service was a modernization move to defend against the poaching competition from both pure-play pay-TV service providers and alternate online video platforms, Xfinity Signature Support is an advancement in the direction of customer service. Essentially, Comcast is looking to improve the overall customer experience with the Xfinity brand. The new support service could improve the company’s brand image and mitigate subscriber defections.

Since the new support service is centered around connected devices, one might wonder what it has to do with Comcast’s pay-TV market share. Comcast bundles its services together combining video, voice and internet. Thus, enhancing the support service for several internet gadgets might act as an incentive for customers to stay with Comcast, supporting market share for a variety of product lines. The service could also help Comcast lift its broadband market share, which has remained more or less flat over the past few years.

See our full analysis and $29.57 price estimate for Comcast stock

1. Comcast Introduces XFINITY Signature Support, Comcast Press Release, Mar 9 2011 [↩] [↩]