Comcast Stream will 'cannibalize' MSO's core video services, analyst says

Comcast's (NASDAQ: CMCSA) upcoming over-the-top pay-TV service could prove popular enough to siphon subscribers away from the MSO's more profitable linear video products, an analyst tells FierceCable.

"This service is very attractive," said Joel Espelien, senior analyst for The Diffusion Group. "Our data shows these [OTT] services have appeal beyond just millennials. There is a real potential that these services will start to cannibalize the core pay-TV market as some people choose to 'downsize' their pay-TV packages."

Comcast said it will soon begin testing in Boston for a new OTT service for Xfinity broadband subscribers that offers mobile-device streaming of broadcast channels and HBO, plus an assortment of on-demand programming, for $15 a month. Comcast said the service will expand to its entire footprint in 2016.

Stream is being most closely compared to Dish Network's (NASDAQ: DISH) Sling TV, which has reportedly gathered around 250,000 subscribers since debuting in early February. The $20-a-month Sling TV features top cable channels such as ESPN, TNT and AMC, but no broadcast networks. It streams through any broadband connection, and it's compatible with living-room OTT devices such as Roku, Apple TV and Xbox One, in addition to iOS and Android mobile platforms.

"This service is part of a larger trend of pay-TV providers trying to come to terms with the new world of video service competition," says Brett Sappington, director of research at Parks Associates. "In offering access to a small set of linear channels, Comcast's new service is similar to Dish Network's Sling TV. Unlike Sling TV, however, Stream will only be available to Xfinity internet customers and not to the general public. Bell Canada's CraveTV is an example of another OTT video service from an operator that is only available to current pay-TV or broadband subscribers."

The fact that Stream is offering over-the-air channels that are free with a broadcast antenna, and doesn't stream to OTT devices, doesn't sit well with some analysts.

"Don't I already have access to those networks?" asked Marc Berman, editor-in-chief of TV Media Insights, to Benzinga. "What am I getting that's different? I think that's the question that needs to be answered, which I don't think is being answered."

Meanwhile, analyst Dan Rayburn cautions that conclusions about the service can't effectively be drawn until Stream officially launches.

"What happens if they roll it out in a couple of test markets and realize that it's not potentially what they thought it was? They don't have as much interest as they thought?" Rayburn asked Wired. "A lot of things can happen. That's the thing with these services, you never know what they're going to turn into. Until they're actually on the market and we can judge them on the merits of the actual service, it's a complete guessing game."

For more:
- read this Wired story
- read this Benzinga story

Related articles:
Comcast to answer Sling TV with $15-per-month OTT pay-TV service, Stream
Sling TV experiences third major outage
The video business is dead … for those without the will and resources to compete in it

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