Weekly Pay-TV Notes: Key Details On Comcast’s Watchble As Netflix Joins Hands With Vodafone Spain

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The pay-TV industry saw significant activity this week, with Variety revealing key details regarding Comcast’s Watchable after the online video venture’s demo site was briefly left publicly accessible. On a separate note, Netflix has decided to sign a deal with Vodafone Spain ahead of Netflix’s launch into the European country. The tie-up will result in Netflix’s integration into Vodafone’s TV platform. On that note, we discuss below these developments related to the pay-TV companies over the past few days.

Variety Reveals Details On Comcast’s Upcoming Streaming Video Service Watchable

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Variety revealed key details regarding Comcast‘s (NASDAQ:CMCSA) online video venture Watchable after the demo site of the service was briefly left unprotected and publicly accessible Wednesday. [1] According to Variety, “the demo site showed that Comcast is positioning Watchable as a kind of mix between YouTube and Hulu: Watchable’s content is clearly Internet-native, but it’s presented without the clutter of a site focused on user-generated content.” Variety elaborates on Watchble’s approach by stating that the service is leaving out the comments section and is prioritizing editor-driven curation, emphasizing on playlists such as “Obama Nation,” “Epic Fails” and “Foodie Delight.” The service will be accessible to subscribers as well as unregistered viewers. Registration will not be necessary for streaming although logged-in users with receive additional personalization options. Variety also listed some of Watchable’s content partners, such as Vox and the Verge, Machinima, Fox Sports Digital, Break, Jukin Media, Discovery Digital, Clevver, iFood.tv, Popsugar, Smosh and Vice.

Comcast is reportedly very close to Watchable’s launch. [2] The streaming video service will enable Comcast to have a stake in the burgeoning online streaming market, but will face intense competition from Youtube, Hulu, Dish’s Sling TV and the likes. We believe that Comcast’s streaming video service will be able to hold its own on strength of the content offered and inclusion of desirable features such as the DVR service. According to our estimates, the streaming video service could generate close to $1.2 billion in revenue by the end of 2020. While this incremental revenue may not have a material impact on Comcast’s top-line in the short run, it will go a long way in compensating for the loss of growth in its stagnant pay-TV segment. (Read in detail – Comcast’s New Streaming Service Will Compensate For Loss Of Growth In Company’s Pay-TV Segment)

Comcast’s stock declined around 1% over the week through Thursday. We currently have a price estimate of $67 for Comcast. For the year 2015, we estimate revenues of $72.95 billion, compared to consensus estimate of $73.13 billion, and EPS of $3.28, compared to a consensus estimate of $3.29.

Netflix Collaborates With Vodafone Spain Ahead Of Spanish Launch

Streaming giant Netflix (NASDAQ:NFLX) has decided to sign a deal with Vodafone Spain which will integrate Netflix into Vodafone’s TV platform. [3] As per the deal, Vodafone’s video subscribers will have access to the Netflix app “without having to update their set-top boxes.” The subscribers will be able to view Netflix’s original programming such as Daredevil, Narcos, Bloodline, and Sense8. The tie-up has been announced just in time for Netflix’s launch into Spain. Netflix is aiming for an October launch in Spain and teaming-up with local businesses will help the company in reaching out more efficiently to the masses. (Related – Launching Into Spain, Italy And Portugal Makes Sense For Netflix) Netflix had earlier announced a similar deal ahead of its September launch in Japan when it decided to partner with Japan’s SoftBank Group. [4] All these international launches are part of the company’s aggressive international expansion strategy that intends to launch streaming services in 200 countries by the end of 2016. Netflix is currently available in over 50 countries and has over 65 million subscribers globally.

Netflix’s stock declined around 14% over the week through Thursday. We currently have a price estimate of $103 for Netflix. For the year 2015, we estimate revenues of $6.79 billion, compared to consensus estimate of $6.83 billion, and EPS of $0.20, compared to a consensus estimate of $0.24.

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Notes:
  1. A Sneak Peek At Watchable, Comcast’s Online Video Service (EXCLUSIVE), September 2, 2015, Variety []
  2. Comcast Gets Ready to Launch Online Video Service on Its Set-Tops and the Web, August 14, 2015, Variety []
  3. Vodafone Spain to Link Netflix to TV Service, September 1, 2015, Multichannel News []
  4. Netflix to partner with SoftBank for Japanese launch, August 24, 2015, Market Watch []