Here’s How Comcast Can Gain From A Streaming Service For Its Internet Customers

Reports suggest that Comcast (NASDAQ:CMCSA) is planning to expand its over-the-top streaming service across the U.S. later this year. This service will be limited to the company’s broadband subscribers, which could imply that it would not count as data usage for the company’s internet users. This could potentially give Comcast an advantage over other players in the segment – as competitors such as Netflix’s services could count against these users’ data caps (where applicable). Comcast has maintained that its streaming service does not violate the principle of net neutrality since it is not exactly an internet service. However, given that a Comcast internet subscription is essential for the service, it is certainly debatable. Either way, Comcast should benefit from this service as it can offer bundled services to attract customers.

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High Quality Streaming At Low Cost

While consumers are moving away from traditional Pay TV subscriptions towards streaming services, these services lead to substantial data consumption, especially if the videos are high quality. For instance one hour of 4K video on Netflix consumes around 7 GB of data as opposed to 0.7 GB for SD quality. Streaming media players can attract consumers with cheaper bundles of popular channels and high quality videos; however, broadband data consumption is another consideration in choosing a service. With Comcast’s offering not counting against data caps, the company could have a competitive edge.

While many Pay-TV players are losing subscribers due to cord-cutting and competition, Comcast has managed to buck the trend through its technology-focused products such as X1. We expect the company’s Pay-TV market share to increase gradually over our forecast period.

With its streaming service, Comcast could potentially grow this share at a faster pace. For instance, Dish Network’s Sling TV has cushioned the company’s subscriber losses, and Comcast could see a similar impact from its streaming service. Furthermore, the potential of bundling more services could drive incremental revenues in the long term.

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