New Comcast SVOD service targets rival MSOs
Comcast’s new subscription VOD service may seem to be all about countering Netflix, but the nation’s largest cable operator actually has different competition in its sights.
While the business model and catalog-oriented content mix beg comparison to a certain Los Gatos, Calif.-based streaming service, Comcast is using Streampix to better position itself against rival satcasters and telcos who are vying for every last subscriber.
“We didn’t set out to go after Netflix’s business,” said Marcien Jenckes, senior VP and GM of video services at Comcast. “We set out to create the most compelling multichannel offering to compete with DirecTV or Verizon Fios.”
Streampix is no Netflix killer for one simple reason: It isn’t a standalone service. The offering is only available to those who already get Comcast cable.
It’s a strategy not unlike what Dish Network is employing via its Blockbuster At Home service, though that add-on to the satcaster service extends to retail and DVDs by mail as well.
Streampix will either be free to those who get Comcast’s triple-play package of video, broadband and phone or for an additional $4.99 fee on top of other varieties of Comcast offerings.
With Streampix, Comcast is looking to drive more value into bundled offerings like the so-called “triple play” combination of video, broadband and phone service that deliver the most ARPU, or average revenue per user. That’s easier said than done given satcasters and telcos are trying to do the same thing, engaging cable operators in dogfights from city to city that require heavy marketing and discounting.
What’s often misread as signs of cord-cutting, for instance, are drops in cable video subs that become the gains for the likes of Dish Network or AT-T U-Verse.
There are only a few thousand titles available at launch, but Jenckes expect a rapid rise in volume over the coming months as more deals are added.
Streampix delivers a missing piece of the puzzle to Xfinity, the digital ecosystem extension to Comcast’s core service where the company is putting more and more emphasis as part of the industrywide TV Everywhere initiative. Xfinity has subsisted on a programming mix including next-day access to primetime broadcast TV, more limited basic-cable VOD and a deep troves of premium cable product–but not the long-tail content that Netflix has made its specialty.
However, it’s Netflix other areas of expertise that make Streampix not quite the direct threat some will make it out to be.
“I don’t know if it creates any issues for Netflix,” said Jenckes. “They’re focused on original content and the DVD business. They’re in a different, complementary business to what we’re doing.”
That said, it certainly doesn’t hurt Comcast if it manages to lure away the surely sizable number of subs who also pay for Netflix. By pricing Streampix a few dollars cheaper than Netflix’s lowest-cost offering, it can drive an influx of subs that could be paying more each month to Comcast.
Comcast is already in the SVOD business to some extent through its stake in Hulu, which has a SVOD offshoot called Hulu Plus, though is a silent partner in the venture, a concession made to get approval for its acquisition of NBCU last year.
Streampix will give out-of-home access to select content across online, wireless and connected-TV platforms, including Comcast’s own existing VOD assets. Among the titles to be made available include “30 Rock,” “Grey’s Anatomy” and “Ocean’s Eleven.”
Said deals will represent for some congloms yet another revenue windfall to crow about on quarterly earnings calls, as the likes of Amazon and Netflix have provided them, though not all of them. While Comcast’s deal with Sony, for instance, is a standard, standalone licensing agreement that goes straight to its bottom line, other deals are embedded in larger affiliate deals, as was the case with the MSO’s recent massive 10-year pact with Disney.
Which brings up another reason Comcast isn’t entirely out to thwart Netflix; the service helps pad its bottom line, too. NBC alone added a $300 million increase in profits to the cable operator’s fourth quarter earnings out last week that was driven entirely almost by its most recent licensing pact with Netflix.