Watch Yourself, Comcast: Creepy Home Security Cameras Could Be Bad for Business
Have you ever pondered the delightfully guilty concept of how cool it would be to be able watch what your kids did when you weren't home? To be able to see whether your babysitter rifled through your drawers after the baby went to bed? Or whether your pet sitter was really sitting? And does the cleaning service really dust the blinds?
Well, Comcast (CMCSA) has been rolling out a service that could make such voyeuristic desires much simpler to indulge. It's been expanding its Xfinity Home service in the hopes that customers will want to add a few more options, creepy as they may be, to their bundles (and add extra cha-ching to those bills).
Are You Ready for Your Close-Up?
Through Xfinity Home, Comcast offers home security options along with its cable TV, broadband, and phone products. In addition to alarm systems, one can install those remote surveillance cameras. (Perhaps one could say that for your personal security, you just need to know whether your teens and their friends are raiding the liquor cabinet after school.) It's also touted as a green product, with features that allow you to remotely controlling lights and thermostats, for example.
Now maybe Comcast could be watching you as much as you watch Comcast. Regardless, the company isn't the only one trying to tap into Americans' desires for safer and more automated homes. In addition to companies like ADT, for which home security is a core product, Comcast's major rival, Verizon (VZ), has gotten into the business. There's a massive U.S. market for such services; this past spring, Comcast Cable Communications President and CEO Neil Smit described it as measuring about $9 billion.
The Hate Factor
Some investors may view Xfinity Home as a big boon for Comcast. After all, it's another potential growth channel, and could drive a lot of extra revenue. And Comcast's need for more revenue probably shouldn't be underestimated, considering the fact that it has been losing basic cable TV subscribers in droves for many quarters now.
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In August, Comcast reported losing 176,000 video customers in its most recent quarter, which was actually an improvement from previous rates of attrition. While it's true that the shaky economy probably is behind the loss of many customers who now are focused on more important bills, there's another reason that investors should think twice about Comcast: A lot of American consumers despise the company.
Comcast is notorious for bad customer service, and it's a common name on lists of the most despised American companies. For example, The American Customer Satisfaction Index rated Comcast No. 4 on its list of most disliked companies. Comcast has been a contender in the Consumerist's Worst Company in America competition for years, and in 2010, won the "gold." There's even an "I hate Comcast" page on Facebook, with nearly 17,000 members who consider themselves "customers, ex-customers, and victims of Comcast."
No Happy Ending for this Reality Show
Comcast may be pushing more heavily into security, but there's no security for investors who buy its shares. Why on Earth would a corporate management pursue a new product line when so many of its core customers aren't even pleased with its traditional products and services? Why expand offerings when many consumers already feel like the infrastructure and customer service stinks? Why spread resources thin under such tenuous circumstances? Customers' goodwill is on the line.
Investors will have more secure portfolios if they go for companies that have generated tons of goodwill with customers and can explore new business opportunities because they're growing forward from a healthy base. Wall Street may look kindly on new business line announcements for some near-term excitement, but the reality is that over the long haul, the core brand matters.
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Motley Fool analyst Alyce Lomax does not own shares of any of the companies mentioned.
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