Two months after Comcast Corporation CMCSA announced that it would make the Netflix Inc. NFLX app available on its X1 platform, the cable giant has decided to roll out a beta version of the service within the next few days. Instead of merely introducing the app, Comcast plans to integrate Netflix into the X1 system, featuring voice controls and search results among other things.
Ushering in a New Trend
Cable TV providers like Comcast have been facing considerable pressure due to growing demand for over-the-top (OTT) video streaming services, which has led to increased cord-cutting in recent years. People have been dumping expensive cable TV plans and shifting toward unbundled packages. To tackle this competitive threat, cable MSO’s have recently begun launching their own internet TV services through their internet connection. Even so, their offerings could not match the ease and feasibility of the OTT service. This spurred smaller cable operators to partner with video streaming providers for offering the latter’s service through a regular set top box. Going forward, we expect to see more of such partnerships between cable TV operators and OTT service providers. Note that Netflix has recently signed another collaborated with cable giant Liberty Global plc LBTYA to offer its content on Liberty Global’s network.
The Bottom Line
Combining Netflix’s attractive content portfolio with its own cable TV system will help Comcast expand its subscriber base. Meanwhile, the partnership will prove equally beneficial for Netflix. The OTT market is on the way to becoming an intensely competitive space given the increasing number of telecom operators rolling out video streaming services. One instance of this is Verizon Communication Inc.’s VZ launch of ‘Go90’. Thus, we believe that the latest partnership is a win-win for both Comcast and Netflix.
Comcast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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