Here’s How Comcast Could Benefit From Bringing Its TV App To Roku

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As it competes with online streaming players, Comcast (NASDAQ:CMCSA) is ensuring that its content can be watched with similar convenience and ease by its viewers. The company recently launched a beta version of its Xfinity TV app for the Roku player in the U.S.  This will allow Xfinity TV users to watch live and on-demand Comcast programs via their existing Roku devices, eliminating the need of a set top box. However, this feature is available only for Comcast subscribers who have a broadband connection from Comcast and the company is likely to charge additional outlet charges for Roku users once the beta test is over and the app is officially launched. Comcast is working on internet equipment which can be used by subscribers who use a different broadband provider and is evaluating its additional outlet policies.  The charges for using Roku to watch Comcast programming could be reduced or eliminated in future, once it is considered as a primary outlet for Comcast, following the official launch.

We believe this launch will allow Comcast to compete better with players such as Netflix, Hulu and Amazon Prime Video as viewers will have the ability to watch its content alongside other streaming video options. Furthermore, as the company reduces the hardware cost, it will encourage viewers to access Comcast programming on multiple devices, potentially increasing viewership.

See our complete analysis for Comcast

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While some networks are facing a significant decline in subscribers due to the cord cutting trend, Comcast has been able to slow down this pace of subscriber losses. This is primarily due to its advanced products such as Xfinity which work similar to the apps offered by streaming services. According to our estimates, cable TV accounts for nearly 30% of Comcast’s valuation and we expect the company’s Pay-TV market share to decline from 22.5% in 2017 to 21.5% by the end of our forecast period.

By making its app available to Roku users, Comcast is joining the league of streaming video media players and consumers are likely to view its content alongside the programming offered by these players. This can lead to a change in perception of the company and better retention of subscribers. However, Comcast might still face a cost disadvantage due to higher subscription and hardware costs. While it is looking to charge an outlet fee for Roku users, we believe waiving this fee in the long term might be a better strategy for the company.

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