Earlier this week, in a move that few were expecting, Amazon.com (AMZN 1.62%) and Comcast (CMCSA +0.14%) rolled out a new partnership.
In this segment from the Industry Focus podcast, Sean O'Reilly and Vincent Shen share what they know about the deal so far, and where listeners can look to discover more. Tune in to find out how long this seemingly out-of-nowhere alliance has apparently been brewing, what customers of both companies can expect from it, and what's in it for both Amazon and Comcast.
A full transcript follows the video.
This podcast was recorded on March 22, 2016.
Sean O'Reilly: I come into work this morning, I got my coffee, I got my Cheerios, I walk over to your desk, and you tell me that Amazon is now selling cable packages for Comcast.
Vincent Shen: Mm-hmm (affirmative).
O'Reilly: Not on my list of things that I expected today. Came out of the blue, right? I mean, this was just announced days ago, and you're showing me the page, it's a very attractive ...
Shen: I actually didn't hear about this until this morning. I had to scramble myself a little bit to gather all the details, and I saw the page for myself. But just to give our listeners a bit more of the background: If you search Amazon cable store, it'll take you to the landing page and you'll be able to see a lot of the details that we cover here, some of the benefits of this partnership. To boil it down for you, its a pretty unlikely tie-up with the cable industry -- considering the fact Amazon could easily be considered one of these new content providers. Their streaming service is often viewed as one of the reasons why some cable companies have seen their subscriber losses, and they're having to change their business model.
From a report in The Wall Street Journal, Comcast CEO Brian Roberts and the head of the cable division, Neil Smith, they met with Jeff Bezos during a trip to Silicon Valley in 2015. So this partnership started there, and then over the past year, they've ironed it out and now it's launching, officially.
Comcast's Xfinity service is the only partner that's currently available, but that is likely to change, based on some other reports that I've seen. This cable store allows you to shop these Comcast offerings, assuming it's available in your area. They'll ask for your ZIP code, you can see all the different packages, and there's also some other perks as well. Amazon's known for making the shopping process so simple.
Think about Prime members, and the fact that they tend to do a lot more buying from Amazon than non-Prime members, just because it's so easy. I think Comcast definitely sees the benefit there, and what they can learn from the partnership, even reducing the number of clicks, for example, to close out the transaction, to finalize it. The thing is, for Amazon customers, there's a lot of perks to signing up through Amazon for Comcast service.
O'Reilly: Gift cards, it says?
Shen: The ordering process is similar, right? A lot of people are familiar with Amazon's checkout service, and the reviews, and that's all here.
O'Reilly: Amazon itself is extremely customer-centric.
Shen: Exactly.
O'Reilly: They're willing to take financial losses in order to make the customer happy, so ...
Shen: There's some tie-ins. Think free Amazon gift cards that come with certain bundles. You have the full lineup of packages; tips on buying your own modem to save money -- so, again, that customer-centric nature. Another big thing that I think will actually be one of the bigger draws to sign up through Amazon is a dedicated customer service team. Comcast is basically setting aside this special staff.
This team will be experts on a lot of the issues you get, from billing to technical issues. So instead of being transferred all around, which I personally experienced, trying to call Comcast when I have had issues, hopefully this one rep can handle everything, and it's a much more streamlined experience when you're contacting them. Also, there's less wait time. Their goal, if you call them, is to answer within 60 seconds or less, which would be pretty impressive, considering the times that I've had to wait.
O'Reilly: That's never happened to me.
Shen: Exactly. A lot more flexibility, just in terms of how they're able to reach out to you via phone, email, chat, social media -- which they're really broadening that -- and again, some people have had absurd experiences, trying to cancel their service. Whereas here, these reps, I think it's something Amazon mentions -- they're not paid by commission. If you call in and you want to cancel within 30 days of signing up for a contract, done deal. If you don't have a term, and you want to downsize your plan or you want to cancel because you're on a no-term contract, boom. None of that pushiness. There's definitely some perks if you are an Amazon customer, signing up this way.
Big picture, though, I think, ever since the Time Warner deal fell apart, Comcast's management team has been really vocal about how they're trying to invest more in their customer service. I think they're spending something along the lines of $300 million, investing in more staff to handle customer service calls. They're doing things like allowing you to track where your technician is, if you have a house call coming, and if they're late they'll credit you, if they're late even a single minute, they'll credit you $20 to your account, for example, trying to encourage better service from the company. In terms of the pros and cons here, better for Amazon, it solidifies its reputation, right, as being this one-stop shop for everything you need.
O'Reilly: Not only that, but when I first saw this, it occurred to me that this is just another value-add for my Prime membership. Because now, if and when I move, I'm currently a Comcast customer here in Alexandria, because they have a little mini-monopoly in this little enclave of Southern D.C. metro area, but when I move, it's easy, my Amazon Prime subscription, to get in there and get new Comcast service.
Shen: Again, it should be a more fluid process signing up through the Amazon service. The thing is, if this roll-out's successful, it'll only reinforce for customers that Amazon can make even a company with a pretty rough reputation have a very positive experience. It's that Amazon effect, that magic that they have. Of course, they're not doing this for free; they earn a fee for each subscriber that signs up, based on again, The Wall Street Journal report, they mentioned they had a source. How much that is, we're not quite sure. Maybe we'll find out more about that in the future.
Then, on the Comcast side, they can learn a lot from this partnership. They're increasing their outlets for signing up new subscribers, they have some of that cross-promotional activity that we mentioned. They offer security services for example, that might also get offered through Amazon at some point in the future. I think this is just another step for them to be able to improve some of their public perception. And pricing-wise, it's the exact same, so you decide to sign up through Comcast, and then you look at Amazon pricing. There's going to be no change there, otherwise.
It's just really interesting. A very unlikely partnership I did not expect to see, and I'm kind of curious if other companies join the flock. Charter, I think, is rumored in that report to also be talking to Amazon about adding their services. If you go to the site, which I highly encourage you to check it out, you can see that they're building in a way that they're preparing to have these other partners in addition to Xfinity. We'll see what the, how many people take to this, and if it's also successful for them.
