Though many believe the trickle of customers leaving cable television behind for purely digital entertainment options will turn into a flood, Comcast (NASDAQ:CMCSA) (NASDAQ: CMCSK) CFO Michael Angelakis sees the changing landscape as an opportunity for his company.
While he expects definite changes in how the cable, Internet, and content giant will make its money, he showed no concerns that cord cutting would damage the bottom line when he addressed the Morgan Stanley Investor Conference earlier this month.
"The consumer is evolving, no surprise to anybody, millennials ... people on the go, people want to use tablets, just look around the room [to see] how many people have tablets and so forth," he said. "And our goal is to evolve with our customer base."
Change can be good
While many view cord cutting as a potential death blow to cable providers, Angelakis sees the move toward digital services as a way to sell more broadband Internet.
"Having over the top or other different types of services are not necessarily competitive to our core services; if [sic] fact, I'd argue they're complementary to the video service [and] actually help our broadband service," he said.
The CFO pointed out that Comcast has had nine straight years of over 1 million customer adds. He explained that while the video side has lost customers, the numbers have been small and they have been more than made up for by other areas of the business growing.
"When you look at the traditional cable business, it's doing fine," he said. "We grew 358,000 customer relationships in 2014. We had lower video losses than we have had in the last seven years."
It's a changing world, but Comcast has created a system where even cord cutters need it for broadband access or at least want to watch some NBC/Universal programming.
Flexibility is key
Because Comcast offers cable and Internet services while also owning channels, Angelakis thinks it is well-positioned to service changing customer demands. He acknowledged that going forward, the company is going to have to refine its offerings for customers who demand more flexibility.
He also sees a possibility that cord cutters will find that costs add up quickly when buying content on an a la carte basis.
"We have thought about more flexible packaging," he said, "more streaming, lighter packages in order to provide those alternatives and those choices to our customers. ... I think, you also have to keep in mind that all these services which have a Wi-Fi component to them or have a broadband component to them really do help our broadband business."
Customer service is key
In some cases, Comcast has driven people to cut the cord or head for phone company or satellite pay television providers by offering lousy customer service. Angelakis told the crowd that he believed the company could change its ways and how consumers perceive it.
"We are determined to provide a transformational customer service experience for our customers," he said.
The CFO explained that over the past few years the company has invested heavily in products, implying that may have led to it skimping on customer service.
"I think our goal now is to take that technology innovation and turn it into a customer service, customer experience innovation," he said. "We have a new team led by Charlie Herrin who I have great confidence in, but we are just determined to change the experience for our customers, not incremental, but transformative."
To make those changes, Angelakis said the company would be "putting real dollars behind it," which he sees as a great investment.
"I'm a huge supporter of having the best customer experience and I think that will decrease churn, increase customer lifetime value, [lead to] a higher propensity to purchase other services, have people think about home security more, whatever we're talking about with new services," he said.
It's all about growth
While Angelakis acknowledged that the company would have to adapt its strategies to meet the needs of a changing customer base, he expressed only optimism about the future.
"We are at a very unique position between the convergence of technology and media," he said. "And I think, we look at all of our different business units, whether it's video, data, voice, our business services or advertising, and we can talk about those or NBC Universal's businesses, and we have a growth plan."