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TKJunkMail
Enjoy the sun
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join:2002-03-03
Avalon, NJ
 ·Sprint Mobile Broa..
 ·Comcast
|  reply to Corydon
Re: Loss of basic video subscribers is a long term worry
said by Corydon  :It does lead to an interesting question: is it better to have fewer customers with a fatter profit margin or more customers with a leaner one?I'd guess that, from a customer service standpoint at least, the former is the better scenario (assuming everything else is equal—staffing, resources, capex, etc.) It isn't a straightforward answer. There is a price that a service can be sold at that will maximize profit. Part of that calculation is the pure revenue curve( »www.netmba.com/econ/micro/demand/curve/ ) in marketing called the "Demand Curve". But that doesn't take in to account costs and how costs vary based on many factors. Usually costs shrink per unit the more units there are. But in some industries, costs/unit jumps in discrete steps based on the cost of the underlying infrastructure.
So the optimal number of customers is a complicated equation. Companies like Comcast have armies of accountants and analysts to identify where the most optimal profit points are.
But many, if not most, decisions a businesses' leadership makes is based on stock price(the basic way an exec is compensated) and NOT just on profit. So what may appear to be the best decision - one based purely on increasing profits - is not so straightforward.
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Corydon
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| reply to TKJunkMail
Thanks for the clarification...it's handy having people who know how to read the financials around 
It does lead to an interesting question: is it better to have fewer customers with a fatter profit margin or more customers with a leaner one?
I'd guess that, from a customer service standpoint at least, the former is the better scenario (assuming everything else is equal—staffing, resources, capex, etc.)
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TKJunkMail
Enjoy the sun
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join:2002-03-03
Avalon, NJ
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·Comcast
| reply to Corydon
said by Corydon :I would imagine that Digital, HSI and VoIP are much more profitable areas; Comcast would probably rather have all of their subs on digital tiers and none on analog. As long as those are growing, they'll be fine. Edit: I note that Comcast's share price is up about a dollar on the news, so investors don't seem too worried either. The basic subscriber number includes all the other categories(and not just analog base tier subscribers). So, when you look at Comcast subscribers, if they don't have the basic subscriber, then they can't upsell them to the higher digital tiers, HSI, VOIP, etc.
So yes, digital services are more profitable, but the digital services are built on top of the basic subscriber number. Keep losing basic subscribers and the number of upsells to digital services will start to decline as well.
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