Comcast's (CMCSA 0.14%) video subscriber losses nearly doubled in 2019. The leading cable TV provider ended the year with just 21.25 million video subscribers, down 733,000 from the end of 2018.

And management says cord-cutting is going to get worse this year. "We expect higher video subscriber losses this year," CFO Mike Cavanaugh stated plainly to investors during the company's fourth quarter earnings call.

That statement isn't entirely unexpected. Comcast's management previously said it's shifting its focus to more profitable video subscribers in the same way AT&T (T -2.41%) shifted last year. Since shifting its strategy to focus on profitable subscribers, AT&T has seen millions of subscribers leave its service. Investors should expect a similar result at Comcast in 2020.

Close up on a hand holding scissors about to cut a coaxial cable.

Image source: Getty Images

Not chasing unprofitable video customers

Comcast's legacy video service is only good for its business insofar as it increases its customer lifetime value. There's a growing segment of the market that doesn't value Comcast's video service to the point where it makes economic sense for Comcast to offer it to them, not even as an add-on to a broadband internet subscription. As more and more streaming video options enter the market, that segment is getting bigger.

"We're not chasing this segment of the market," Cavanaugh said. That stands in contrast to what some of its competitors are doing. Charter Communications (CHTR 3.38%), for instance, offers skinny bundles to its broadband subscribers in order to squeeze more revenue out of them and increase their likelihood of staying subscribed to Charter. Offering and marketing those skinny bundles may be heightened in markets where AT&T has expanded its broadband efforts.

On the contrary, Comcast is raising its rates this year. That echoes the moves AT&T made last year, when it raised rates across all of its video products and stopped offering big introductory discounts. Additionally, Comcast's introductory bundling discounts now reflect offers similar to AT&T, about $20 off per month for 12 months.

Management already noted it's seeing fewer gross additions. Combined with its unwillingness to retain unprofitable customers and a growing segment of the market with a decreased value for the cable bundle, customer losses will surely take another step up in 2020. AT&T lost 3.6 million out of 25.2 million subscribers in the 12 months ending in September. While Comcast's subscriber decline might not be as severe, it could easily top one million in 2020.

All about serving the growing market for streaming

Instead of offering broadband subscribers a bundle with video service, Comcast has shifted to focus on the growing demand for streaming video as a means to increase customer loyalty and increase revenue per subscriber.

Last year, it introduced a streaming device called Flex that its broadband-only subscribers could rent for $5 per month. After a tepid response from customers, it switched to offering the device for free, and Comcast couldn't keep enough in stock.

Later this year, the company will begin offering its subscribers access to Peacock Premium, which it says is a $5 per month value. Peacock Premium provides access to additional content over the standard free Peacock offering, but it's still ad-supported. 

Make no mistake, though, Comcast expects the increased value these add-ons provide to enable it to increase its broadband rates. Head of Comcast's Cable division Dave Watson said the company postponed planned rate increases from late 2019 to the early part of 2020. He expects to see a step up in revenue per subscriber in the first half of the year.

The success of Comcast's broadband business stands in contrast to AT&T. The competitor lost about 150,000 subscribers over the past six months as it makes a similar shift to its TV business, focusing more on higher-value fiber customers.

Comcast has managed to increase speeds and provide additional features and products for broadband subscribers, and those moves could stave off competition from AT&T and others. That's essential as its de facto monopoly on video service erodes with the growing number of streaming video options.