Weekly Pay-TV Notes: Comcast Launches Watchable, Netflix Picks Up Seven New Kids-Focused Original Series

+10.85%
Upside
43.12
Market
47.80
Trefis
CMCSA: Comcast logo
CMCSA
Comcast

The pay-TV industry saw significant activity this week, with Comcast announcing the launch of its online video venture Watchable. Comcast is launching the service with around 30 online network partners and will be sharing the ad revenues with Watchable’s content creators. On a separate note, Netflix announced recently that it is set to add seven new original series focused at older kids to its burgeoning repertoire of original programming. Netflix’s dedicated section for kids now features a global lineup of more than 35 original series for kids of all ages along with content from partners including Disney Channel, Mattel, DreamWorks Animation, Hasbro, PBS, Scholastic and Lego. On that note, we discuss below these developments related to the pay-TV companies over the past few days.

Comcast Launches Online Video Venture Watchable

Relevant Articles
  1. Rising 15% Over The Last Year, Will Comcast Stock See Gains Following Q4 Results?
  2. Can Comcast Stock Recover 40% To Pre-Inflation Shock Highs?
  3. What To Expect From Comcast’s Q3 Results?
  4. Will Comcast Stock Return To Its Pre-Inflation Shock Highs?
  5. What To Expect From Comcast’s Q2 Results
  6. Will Comcast Stock Return To Pre-Inflation Shock Highs?

Comcast (NASDAQ:CMCSA) recently announced the launch of its online video venture Watchable. [1] Watchable will include an app and a stand-alone website, along with a tab on Comcast’s X1 set-top boxes. Comcast is launching the service with around 30 online network partners, including Comcast’s own NBCUniversal along with Machinima, Vox Media, Buzzfeed, GoPro, Mashable, Discovery Digital Networks, Maker Studios, Popsugar, Garage Monkey and Vice. Watchable will be concentrating on bringing internet-native content to its viewers, and will operate more along the lines of YouTube rather than Netflix or Hulu. Comcast will be sharing the revenues generated from advertisements with Watchable’s content creators. The details regarding what share the content creators will get have not been made public but experts believe that Comcast will offer a better deal as compared to YouTube, which retains about 50% of its ad revenue. [1] Watchable 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. While the service’s incremental revenue may not have a material impact on Comcast’s top-line in the short run, it could help in compensating for the loss of growth in the company’s stagnant pay-TV segment.

Comcast’s stock gained around 1.5% 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 $73.14 billion, and EPS of $3.28, compared to a consensus estimate of $3.30.

Netflix Adds Seven New Kids-Focused Series To Its Original Programming

Netflix (NASDAQ:NFLX) announced Thursday that it is set to add seven new original series focused at older kids to its burgeoning repertoire of original programming. [2] The streaming giant will launch two shows – Glitter Force and Dawn of the Croods – this December, and will follow them up with new shows from the popular LEGO Bionicle and LEGO Friends franchises in the first and second quarters of 2016 respectively. The other three shows include Lost & Found Music Studios (Q1 2016), Buddy Thunderstruck (2017) and Las Leyendas (2017). Netflix had also announced last June that it had picked up four new animated shows, which were aimed at the pre–school audience. [3] The animated shows included preschool shows Puffin Rock (2015) and Cirque du Soleil – Luna Petunia (Fall 2016) along with action adventure shows Edgar Rice Burroughs Tarzan and Jane (2016) and Kulipari: An Army of Frogs (2016).

With the addition of the new original shows, Netflix’s dedicated section for kids features a global line-up of more than 35 original series for kids of all ages along with content from partners including Disney Channel, Mattel, DreamWorks Animation, Hasbro, PBS, Scholastic and Lego. Shoring up the content focused on kids makes sense for Netflix, as such content has been successful for the company in the past. Andy Yeatman, Director of Global Kids Content for Netflix, claimed that “roughly half of our 65 million members around the world regularly watch kids’ content.” Netflix’s success with its adult-focused original content has improved viewers’ perception of the overall brand and we believe that similar success with kid’s programming will further increase the “stickability factor” of the brand.

Netflix’s stock gained around 3.7% 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.

View Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research

Notes:
  1. Comcast launches ‘Watchable’ video app to tackle digital advertising, 29 September, 2015, CNBC [] []
  2. NETFLIX ADDS SEVEN NEW ORIGINAL SERIES FOR OLDER KIDS BRINGING ITS GLOBAL ORIGINAL LINE UP TO MORE THAN 35 SERIES FOR KIDS OF ALL AGES, October 1, 2015, Netflix Media Centre []
  3. NETFLIX ANNOUNCES FOUR NEW ORIGINAL ANIMATED SERIES FOR KIDS, Jun 03, 2015, Netflix Media Centre []