The fixed network internet access business now is importantly augmented by video subscription services, which significantly boost average revenue per account. For defenders as well as attackers, video take rates have an important impact on the business model.
In the latest figures compiled by the US Copyright Office and reported and analyzed by MoffettNathanson, Google Fiber said it added a little over 15,000 video subscribers in the second half of 2016, boosting its total to slightly over 84,000 video customers in its seven markets.
To be sure, that represents a 57.8 percent annual growth rate, but from a small base. Perhaps more important, video account additions declined from the 66.2 percent year-over-year growth rate in the first half of 2016 and the 78.8 percent annual growth rate in the same period of 2015.
The data also show that video subscriber growth slowed particularly in Google Fiber's principal Kansas City market. "Google Fiber added 19 percent fewer customers in Greater Kansas City over the past six months than they did over the six months prior, and their six-month growth rate in the region slowed from 27.4 percent to 17.4 percent,” said Craig Moffett, MoffettNathanson principal analyst.
Video remains the single largest revenue contributor for Comcast, as you might expect. But even at Verizon, video service adoption was about 35 percent in the fourth quarter of 2015. In the third quarter of 2016 Verizon added video accounts at a rate about 40 percent that of Fios internet access services.
Since gross revenue for each video account can easily be larger than revenue for internet access, video has emerged as a key method for boosting account gross revenue and average revenue per account. In some cases, video drives as much as 60 percent of net additions.
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