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Netflix and Comcast Expand Partnership to Boost User Base

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Netflix NFLX subscription will now be part of Comcast’s CMCSA new and existing Xfinity packages, following the two companies’ recently expanded partnership.

The relationship of the two companies dates back to 2016 when the cable giant made the Netflix app available on its X1 platform, featuring voice controls and search results, among other things.

Talking about the recent deal, Comcast’s chief business development officer, Sam Schwartz who views Netflix as “an important supplement to the content offering and value proposition of the X1 platform” was quoted saying, “Netflix is a great partner, and we are excited to offer its services to our customers in new ways that provide them with more choice, value and flexibility.”

Although no specifics regarding the pricing of Netflix as part of the bundle were shared, the billing partnership is likely to be a win-win situation for both.

Why is the Partnership Important?

Netflix and other video streaming services have been causing severe concern for big cable business, as customers are ditching traditional TV in favor of more personal streaming experience.

Per recently released Piper Jaffray’s 35th semi-annual Taking Stock with Teens survey, Netflix’s dominance in video consumption is increasing and it is currently the most preferred platform among teens.

Reportedly, the respondents spent 39% of their time watching Netflix, up 2% from 2017 fall while viewership for Cable/Sat TV declined 2% to 20% over the same time frame.

We therefore believe integrating Netflix with the “vast Xfinity entertainment library on X1” will help Comcast retain customers by providing them the content that they wish to watch.

Coming back to Netflix, the deal will bring in a lot of new customers who are not into cord cutting. This is expected to help the streaming giant boost its domestic user base, which is nearing saturation.

Moreover, rising competition in the domestic market is a major headwind for Netflix as most of the players are investing heavily to develop original content, which holds the key to attract new subscribers. Apart from Amazon.com AMZN, some of its noteworthy competitors include HBO, Hulu, Facebook Watch, Apple Music and The Walt Disney DIS.

Netflix carries a Zacks Rank #2 (Buy) while Comcast carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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