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?
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