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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
Time Warner's(TWX) HBO Go service is now available on
Microsoft's(MSFT) Xbox 360 for
Comcast's(CMCSA) Xfinity TV customers. The Xfinity branded TV service from Comcast includes regular pay-TV along with on-demand access to several movies and TV shows. HBO Go is a separate streaming service that is allowed to only those subscribers who subscribe to HBO channel in their pay-TV packages.
While Comcast is trying to push its own streaming and on-demand offerings, it is imperative for the company to push premium services such as HBO Go in order to retain customers. Nevertheless while HBO Go data will count toward subscribers' monthly data cap, accessing Xfinity on-demand service on the Xbox will not. This brings up the debate of net neutrality that the FCC has been pushing for quite some time now. There are few things to note here.
Firstly, Comcast's argument that it is delivering its Xfinity on-demand service over its private network is probably not sound enough to ensure that this practice will not encounter anti-competitive scrutiny. It appears that Comcast could be trying to take away subscribers' share of viewing time, which is limited, and get them hooked to its own service. If that happens, the probability that the subscribers will migrate to other services will reduce.
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Comcast mentions on its Web site that 99% of its customers use less than the data cap of 250 GB. This equation is going to change as streaming adoption continues to accelerate. Video forms a large part of data consumption, and with the shift to HD video, the 250 GB cap might become a meaningful differentiating factor and thus create an undue advantage for Comcast's own on-demand and streaming services. Others such as
Netflix(NFLX) might find this a very unfavorable development.
Link With NBCUniversal Acquisition
We have previously discussed how Comcast's acquisition of
NBCUniversal could be a result of its motivation to control more content. By having control over the content and the delivery platform, Comcast could make it difficult for other companies to compete. While that is certainly not the case today, should it increase its content portfolio, it could turn into an issue.
We can't blame Comcast for its efforts. We estimate that digital cable constitutes close to 25% of Comcast's value, and the company has struggled with subscriber losses in this area over the past few years.
price estimate for Comcast stands at $26.60, implying a discount of about 15% to the market price.
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