This Is No Netflix Killer

The country's largest cable television provider is taking on Netflix (Nasdaq: NFLX  ) , but this may not be the death match that bloodthirsty fans crave.

Comcast's (Nasdaq: CMCSK  ) Streampix has all the makings of a decent offering. Subscribers will have access to select TV shows and movies across a wide range of Web-tethered devices. The price is right. Streampix will set subscribers back just $4.99 a month, and it will be provided at no additional cost to Comcast accounts that have bundled the giant's cable, telephone, and Internet services.

How long will it take to build a catalog as vast as Netflix's streaming service?

It's a fair question, but the one thing holding Streampix back is the same stipulation that has been keeping DISH Network's (Nasdaq: DISH  ) Blockbuster Movie Pass from primetime couch potatoes: Comcast is only making Streampix available to active cable customers.

In other words, instead of giving picky TV buffs a compelling value proposition, Comcast is just making its service more expensive.

Comcast has a problem. It's running out of people to gouge. The monthly average total revenue per video customer has increased 7% to $141.24 over the past year. The bundling of its three core services into a single pricy package may seem like good business, but every recent quarter finds more Comcastic defections than additions.

Investors cheered last week when Comcast revealed that it only shed 17,000 net video customers during the final three months of 2011, but there's little reason to believe that the cable giant's 22.3 million subscribers won't continue to shrink. Comcast has lost 460,000 video customers over the past year and more than 1.2 million over the past two years.

Even if Streampix matches the entire digital library that Netflix offers for $7.99 a month, it's still not going to unseat the streaming champ. Paying $141.24 to save $3 a month is a bad bet. More to the point, Netflix is available to every home in 47 different countries. Streampix is limited to the 22.3 million homes -- and shrinking -- on Comcast.

Streampix is a bigger threat to Time Warner's (NYSE: TWX  ) HBO and CBS' (NYSE: CBS  ) Showtime than it is to Netflix. Think about it. Will subscribers want to pay more than twice as much as they can for Streampix for a premium movie channel? Streampix may be doing Comcast more harm than good by pointing out how expensive HBO and Showtime are for programming that amounts to a handful of movies and proprietary shows.

There will be some Netflix subscribers on Comcast who decide that Streampix is the better fit. This isn't a battle for Netflix to win as much as it is a war to keep defections in check.

However, Streampix isn't a Netflix killer. How can it be, if Comcast is already bleeding slowly?

Stream on
Motley Fool co-founder David Gardner has been a fan of Netflix as a disruptor for nearly a decade, but there's a new rule-breaking mutlibagger that's worth getting excited about these days. Learn more in a free report that you can check out now.

Motley Fool newsletter services have recommended buying shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (3) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 22, 2012, at 10:59 AM, MINNION wrote:

    Hbo also has their own streaming service. Its called HboGo and its FREE, free, free 1400 shows and movies. Its available on your mobile also. I think that unless NFLX cna offer its service for 4.99 a month its not going to be around long.

  • Report this Comment On February 22, 2012, at 9:17 PM, chadscards1274 wrote:

    MINNION - one hol in your argument, HBOGo is not free, you have to have HBO, in order to do that you already are paying for a premium cable service. The definition of free is costs nothing. Oh and sorry but 1,400 shows vs Netflix catalog - not even a contest.

  • Report this Comment On March 26, 2012, at 5:30 PM, XMFStockgor wrote:

    I just got off the phone with Comcast and they said that the least thing that I would have to do to get Streampix is also subscribe to their internet. So in this scenario I would have to pay 4.99 for the Streampix subscription + internet.

    However, with other more expensive packages Streampix is already included in the price.

    I would rather see them make this subscription separate from everything else, but at the same time maybe its good how they are doing it now in that they can attract more customers like this.

    I would hold off on Comcast for now until I see some numbers validating this strategy.

Add your comment.

DocumentId: 1785371, ~/Articles/ArticleHandler.aspx, 7/23/2014 1:06:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement