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Continuous loss of video subscribers has forced Comcast Corporation (CMCSA - Analyst Report) – the largest cable MSO in the U.S., to enhance its service offerings by promoting cloud-based service to its cable customers.
Comcast boasts a massive video subscriber base of nearly 22.1 million. The company is offering its cable TV service through its set-top boxes installed in millions of household in the U.S.
However, with the advent of online video distribution companies like Netflix, Inc. (NFLX - Analyst Report) and Hulu, coupled with higher proliferation of smartphones and tablets, the concept of watching TV has completely changed. Moreover, continuous rollout of 3G/4GLTE technology has further accelerated the data speed, which resulted in incremental video subscriber churn rate.
So, to counter such stiff competition, Comcast is constantly launching several innovative services. One among them is the next-generation web-capable platform called “Xcalibur” or X1, which offers a hybrid IP/QAM video gateway with an advanced user interface and has the ability to port third-party apps that tie into a cloud-based infrastructure.
Comcast launched its major innovative product called Xfinity Streampix, a subscription based on-demand video streaming service for TV sets and broadband enabled devices. Through this, a person can watch TV shows anytime and anywhere he/she prefers to watch.
We believe that the idea to move most of Comcast apps to its cloud platform X1 will not only reduce the company’s cost of developing advanced set top boxes, but will also improve the quality of its services. Subscribers will also be able to access the service anytime and anywhere they feel like, hence reducing subscriber churn rate.
Currently, we are maintaining our long-term Neutral recommendation on Comcast. Comcast has a Zacks#2 Rank, implying a short-term Buy rating on the stock.
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