Comcast Eyeing Cheaper Channel Bundle With SVOD28 Oct, 2013 By: Erik Gruenwedel
Netflix CEO Reed Hasting’s public campaigning to piggyback his subscription video-on-demand service on multichannel video program distributors such as cable, satellite and telecommunication appears to have gotten the attention of Comcast — but with unintended consequences.
The No. 1 cable operator reportedly is considering launching a less expensive broadband channel package that would include its proprietary Streampix SVOD service, in addition to HBO, HBO Go and 20 basic channels.
Dubbed “Internet Plus,” the 12-month promotion would also include cloud-based VOD functionality, 25Mbps high-speed Internet access and retail from $40 a month — about twice the price Comcast currently charges typical HBO subscribers just for the Time Warner-owned premium channel.
Indeed, the typical Comcast subscriber who also gets telecommunications service, broadband and more than 200 channels, can pay on average about $175 a month, according to the cable operator's recent fiscal statements.
"Nearly a decade of promotional offer designs, and we have never had a limited basic/premium combination," a source told DSLReports.com, which first reported Comcast’s strategy.
Hastings, in Netflix’s most recent fiscal webcast, alluded to ongoing discussions with foreign MVPDs and smaller domestic cablers about adding the SVOD pioneer as a bundled offering requiring a separate subscription. Netflix earlier this year latched onto Virgin Media in the United Kingdom, in addition to a Swedish cabler.
Pay-TV operators have long considered Netflix (and $7.99 monthly SVOD service) growing competition, despite Hastings’ statements to the contrary. Hastings says SVOD complements MVPD despite the fact Netflix's subscriber base topped HBO domestically for the first time.
As Netflix continues to spend large on third-party content license rights, in addition to churning out original fare, MVPDs feel compelled to act.
Of course Comcast’s Streampix, which is a $5 monthly add-on to Xfinity subscribers, suffers from the same reality that Netflix streaming faced in 2008: dearth of quality content.
While Comcast would appear to have the upper hand on Netflix since it owns Universal Studios and NBC, the fiscal reality is that the content holder would undermine its own third-party license fees by also offering its own TV shows and movies on Streampix, which charges a smaller subscriber base 38% less than Netflix charges 30 million households in the United States.
It’s the same dilemma that Comcast, Disney and Fox face with Hulu — and the reason the corporate parents launched SVOD service Hulu Plus, and twice tried to sell the entire platform to the highest bidder. Both private auctions ultimately undone by the hard fact that no suitor wanted to pay billions for a platform without long-term content rights.
It’s a double-edged sword that, thus far, continues to elude impacting HBO (and Showtime Networks). That’s because HBO’s mix of theatrical movies and original episodic content sustains high retransmission fees and a global subscriber base topping 114 million — nearly three times the size of Netflix.