Comcast's (NASDAQ:CMCSA) cable box is now a video game console.
After months of speculation, the cable giant has officially unveiled its partnership with Electronic Arts (NASDAQ:EA). Using a Comcast Internet connection and Xfinity X1 set-top box, customers can stream select gaming titles over the Internet to their televisions. Although the partnership may not disrupt the current console gaming landscape in the near-term, it represents an interesting new market and an opportunity -- both for Electronic Arts and for Comcast.
Comcast's cloud-based set-top box adds a new feature
Comcast's X1 set-top box is among the most advanced in the industry. Initially unveiled in 2012, the X1 supports voice commands, offers a cloud-based DVR and personalized recommendations, and can run third-party apps, including Pandora. Comcast's management has said it planned to improve the X1's features over time. Xfinity Games stands as the latest, and perhaps most significant, upgrade.
Players can choose from a catalog of select Electronic Arts titles, including Plants vs Zombies, FIFA 13, and NBA Jam. Games are played using tablets or smartphones connected over Wi-Fi rather than with standard controllers. Comcast's X1 isn't capable of actually running the games -- they're played on distant servers, then beamed over the Internet to subscribers' set-top boxes.
A way to stem subscriber losses?
Currently, Comcast is offering the service for free to select participants in its beta test. That might eventually change to a model built around subscriptions.
Alternatively, Comcast could see additional revenue from increased data usage. On its Xfinity Games website, Comcast makes it clear that games streamed over its network count toward customers' Internet data caps. Comcast's cap varies based on region -- and it doesn't enforce a cap everywhere -- but where it is enforced, it charges an additional $10 per month for every 50GB used above the cap.
Xfinity Games could also serve as a way to keep Comcast's cable subscribers loyal. Earlier this month, Comcast revealed that it now has more Internet subscribers (22.6 million) than cable TV customers (22.3 million). Streaming video services and Internet-based, pay-TV alternatives have made living without cable an increasingly viable option. Those who want to take advantage of Xfinity Games, however, will need a Comcast set-top box and pay-TV subscription.
A new market for Electronic Arts' games
For Electronic Arts, Xfinity Games offers up a new avenue for revenue beyond its traditional console, PC, and mobile offerings. Electronic Arts has not disclosed how much Comcast is paying for the service, but may shed some light on the deal later this week when it turns in its quarterly earnings.
This service is not likely to affect Electronic Arts' results to a material degree in the near future, but if Xfinity Games proves popular, it could open up a new market. As it stands, Electronic Arts is limited in its ability to sell television-based games to those with relatively expensive game consoles. The Xbox One and PlayStation 4 have sold tens of millions of units globally, but the majority of American households don't have either box. Some of those are undoubtedly Comcast TV subscribers who could be lured by the company's latest offering.
Last year, Electronic Arts launched EA Access, the first subscription-based game offering from a major publisher. Partnering with a cable provider to offer streaming games is another first for Electronic Arts and the industry in general. If nothing else, Xfinity Games demonstrates the increasing degree to which Electronic Arts' management is innovating.
Sam Mattera has no position in any stocks mentioned. The Motley Fool both recommends and owns shares of Pandora Media. 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.