Chart: Steven Leckart; Chart design: Nicholas Felton; Sources: Comcast, Forrester Research Phone companies sell calls; electronics companies sell gadgets. But cable giant Comcast is in both those businesses and a lot more besides. This gives it flexibility to cross-subsidize products, making one thing free in order to sell another. To that end, Comcast has given about 9 million subscribers free set-top digital video recorders. How can it make that money back?
A) Add hidden fees. Comcast charges a $19.99 installation fee to every new DVR customer. B) Charge a monthly subscription. Comcast customers pay $13.95 a month to use the DVR box. Even if Comcast paid $250 for its DVRs — a very high estimate — the boxes would pay for themselves within 18 months. C) Upsell other services. Comcast hopes to win over new customers with its free DVRs and then interest them in other services — like high-speed Internet ($43 a month for 8 Mbps) and digital telephony ($39.95 a month). And that doesn't count the pay-per-view movies, which cost DVR users about $5 each.
Free! Why $0.00 Is the Future of Business
