Comcast Corporation (CMCSA), the largest cable MSO (multi-service operator) in the U.S, plans to offer value added services to its premium subscribers who are willing to watch newly released movies at home.
Comcast’s customers in the popular cities of Atlanta and Portland, and who have the HD TV telecast facility, will be able to watch the new movie "Tower Heist," which is slated for release on November 4, this year. The new service will allow Comcast subscribers to rent the movie from November 23 onwards, at a cost of $60 for unlimited viewing for 48 hours.
Most Comcast customers residing in the above mentioned cities subscribe to HD TV service plans and are frequent movie watchers. So, the company has particularly targeted these two cities to carry out its new experiment.
Earlier, pay TV subscribers could watch newly released movies only after a window period of at least three months. But with the recent boom of online video streaming companies such as Netflix Inc. (NFLX) and Hulu, which offer new movies after a gap of at least one month has certainly increased competition in the pay TV industry. Moreover, we believe that such a move by Comcast and its sister concern NBC Universal will able to counter the threat arising from the menace of video piracy.
Comcast has emerged as the largest integrated content development and distribution company in the U.S. after completing the acquisition of NBC Universal. We remain optimistic regarding the company’s diversification, network upgrade and innovative product offering strategies.
However, Comcast is facing stiff competition from both telecom and satellite service providers who have started offering subscription TV services at a lower price. Verizon Wireless (VZ”>VZ) with its FiOS network and AT&T (T”>T) with its U-Verse network are likely to add more competition. Moreover, the cheaper online movie distribution companies such as Netflix and Hulu will further fuel the cut throat competition going forward.
We, thus, maintain our long-term Neutral recommendation for Comcast. Currently, Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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