The once-mighty and much-feared Google Fiber appears to be turning quickly into a rather minor player in the US broadband market.
In the latest figures compiled by the US Copyright Office and reported and analyzed by Wall Street firm MoffettNathanson LLC , for instance, Google Fiber Inc. said it added a little over 15,000 video subscribers in the second half of last year, boosting its total to slightly over 84,000 video customers in its seven existing markets. That amounts to a 57.8% annual growth rate on a relatively small base, down from a 66.2% year-over-year growth rate in the first half of 2016 and a 78.8% annual growth rate in the year-ago period.
Further, the US Copyright Office data show that video subscriber growth has particularly showed in Google Fiber's principal market, the Kansas City metro area where most of its customers reside. As Craig Moffett, principal analyst at MoffettNathanson, notes in a memo to investors, "Google Fiber added 19% 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% to 17.4%."
As a result, seven years after breaking ground in its first market and five months after halting work in new markets, Google Fiber still commands just a pitiful 0.1% of the massive US pay-TV market. And, even in its existing market, its video penetration rate appears to be no greater than 10% to 15%. That's nothing to brag about. (See Google Fiber Hits Pause Button, Scales Back and Gigabites: Et Tu, Google Fiber?.)
Of course, as Moffett points out, video has never been Google Fiber's main focus. So its notably slower pay-TV subscriber growth does not necessarily mean that subscriber growth in its core broadband sector is falling too. It's quite possible that Google has now put all its video eggs in the basket of its new YouTube TV OTT video venture, which is slated to launch momentarily.
But it's certainly not a good sign of Google Fiber's continuing commitment to the wireline broadband market following its broad pullback from expansion. It will be interesting to see what the next year brings.
Update: Google Fiber may have gained a few thousand more video subscribers in the second half of the year than initially reported because the Copyright Office's calculations are not yet complete. Sources say the company may have seen video sub growth approaching 64% on an annual basis, rather than nearly 59%.
Separately, Google Fiber issued a statement Monday on the MoffettNathanson report: "We started Google Fiber to make the Internet better. Our super fast service is currently available to subscribers in 9 metropolitan areas, with 3 more under construction or planned. Demand for Fiber speed continues to grow, as more consumers move toward Over-the-top streaming and skinny TV offerings."
Google Fiber did not release any new broadband subscriber numbers, however. So it's still difficult to gauge how successful it's been.
A source said Google Fiber did more than double its Internet subscribers in 2016 compared to all previous years combined.
— Alan Breznick, Cable/Video Practice Leader, Light Reading