Comcast's 'Netflix challenge' a bonus for content owners more than users

editor's corner

Jim O'Neil

When once "disruptive technologies" become mainstream, you have to guess there's something new on the horizon.

This week's entrée: Comcast (Nasdaq: CMCSA)'s Xfinity Streampix, the MSO's just-announced subscription video service that, for just a couple of dollars less than Netflix (Nasdaq: NFLX)--$4.99 a month compared to $7.99 a month-will give the MSO's subscribers a whole lot less.

The service launches Thursday with a catalog of older titles like Crouching Tiger, Hidden Dragon and The Big Lebowski, and a library of used TV shows, including 30 Rock, The Office and Ugly Betty. It's similar to the debut of other services over the past several months that have drawn derisive comments for being loaded with content that's of little interest to consumers.

While some pundits are labeling Streampix the "latest Netflix competitor," it comes with the same basic flaw that, say Dish Network's (Nasdaq: DISH) Blockbuster offering carries, it's only available to Comcast subscribers, who now will have to pay more than 60 percent of a Netflix subscription for less than, to be kind, a fifth of the content.

Streampix will be available initially on Apple (Nasdaq: AAPL) iOS devices, through cable STBs and on several other connected devices. Comcast said content from Disney, Sony Pictures, Warner Bros and NBCUniversal will be included in the offering.

"Streampix is another step moving TV Everywhere forward by giving customers access to an even greater library of popular choices to watch," said Marcien Jenckes, general manager of video services at Comcast, adding "It is not at all our intention to compete with Netflix."

Potentially, Comcast could offer the service out of its footprint eventually, but it still would face stiff competition from multiple fronts.

Earlier this month, another service provider, Verizon (NYSE: VZ), struck a deal with Coinstar's (Nasdaq: CSTR) Redbox (which in turn bought Blockbuster Express from NCR) to set up a joint venture that would stream and rent DVDs. That offering isn't limited by geography, but it is offering pretty slim content picking. No price or launch on that one yet.

Of course, Amazon (Nasdaq: AMZN) Instant Prime is still picking up content, although recent reports say its subscriber base isn't growing as quickly as the e-tailer had hoped. Apple is waiting in the wings with a rumored connected TV that is likely to make a major splash in the space. Hulu continues to grow subscribers to its premium service and garner gaudy viewer stats from comScore, which reported the site has increased UV nearly 26 percent in the past year.

The stock market reacted with its typical fury, sending Netflix down 3.65 percent, or $4.45, after the news came out, But, that could just as easily been the result of the streaming company's most recent brush with angry subscribers. Bloomberg reported the "American Consumer Satisfaction Index" for Netflix slid 14 points to 74 percent from 88 percent a year earlier, below the 76.1 average of other retailers and one of the biggest skids in the reports history.

Meanwhile, Netflix announced another content deal, this one with the Weinstein Co., that will bring it titles like The Artist, Sarah's Key, and W.E. It's the first deal between the two companies, and it's an exclusive that will bring new titles to Netflix before they're available to pay TV.

Netflix, according to the Los Angeles Times, also is in talks with Colin Callender, the former HBO Films president, regarding deals that will bring more original content, including mini-series and movies, to the streaming company, moving it yet another step closer to its biggest role model--and biggest threat--HBO itself.

If it can strike that deal, it'll open up a whole new river of quality content. And consumers follow content.--Jim

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