Why Does Comcast See Value in Its Partnership with Amazon?

Why Does Comcast See Value in Its Partnership with Amazon?

Comcast’s partnership with Amazon

Comcast (CMCSA) is pushing its Triple Play (voice, video, and high-speed Internet) services through multiple marketing channels. In March of this year, Comcast began retailing its Xfinity Triple Play services through the Amazon (AMZN) Cable Store. This partnership with Amazon is another effort by Comcast to push its Xfinity Triple Play services and build its brand among customers.

Why Does Comcast See Value in Its Partnership with Amazon?

A Wall Street Journal report states that Comcast has employed around 90 customer service representatives to answer queries that come through the Amazon store about Comcast’s products in 60 seconds or less. According to the same report, Charter Communications (CHTR) was planning to sell its own Triple Play services through Amazon.

Comcast stated in its 1Q16 earnings call that every year it seeks new channels to market its services. So far, it believes that its partnership with Amazon looks promising. Comcast has also stated that its partnership with Amazon has resulted in a better understanding of “contextual selling.”

Relationship between Comcast’s churn and its partnership with Amazon

Comcast also stated in its 1Q16 earnings call that it believes its partnership with Amazon could help to reduce churn. Another way Comcast has been successful in reducing churn is through market segmentation. The company continues to offer different products in its Triple Play services based on market segmentation. Its segments include Streaming, Watchable, and Xfinity On Campus.

Using market segmentation, Comcast can upgrade an existing customer to another product instead of losing the customer to its competitors. This suggests that market segmentation could result in the reduction of involuntary churn, which could boost the company’s ARPU (average revenue per user) for its Cable Communications business. In 1Q16, Comcast Cable had an ARPU of $146.15, up by 4% over 1Q15.

Comcast makes up 3.0% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ has 4.6% exposure to the TV sector and invests 0.66% of its holdings in 21st Century Fox (FOXA).

In the next part of this series, we’ll look at Comcast’s focus on theme park attractions.

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