Comcast CMCSA is preparing to enter the streaming space, but in a way that isn’t cannibalistic to a significant topline driver. Peacock, a salute to NBC’s iconic logo, will be the Comcast’s new streaming platform. This service will offer users access to hit NBC shows and movies as well as live sports for $0 - $10 dollars a month. But whether this platform will be able to compete in this streaming market remains to be seen. The platform’s ability to partner with other networks will be crucial for its long-term growth.
Comcast isn’t full-on betting against cable, like Disney DIS and AT&T T appear to be doing. There is still a sizable market for cable TV, and it is still a massive topline driver for the business. Comcast isn’t going to put all of its eggs in one basket but rather invest in the slow and gradual transition towards streaming.
Peacock service will be offered at three different tiers from $0 that will provide ad-supported content for Comcast subscribers, a $5 level, which will give users full access to NBCUniversal’s content and an ad-free $10 subscription. Streaming advertising will allow Comcast to rely less heavily on paid subscriptions. This service will be available to Xfinity customers as soon as April 15th and to the broader public on July 15th of this year (just in time for the 2020 Summer Olympics.
Comcast wants to remind the world how good of a network NBC is and why cable is still relevant. The 2020 Tokyo Olympics this summer is going to be a massive catalyst for cord-cutters to subscribe to Peacock, as this platform will have exclusive access to all the live events.
Comcast released earning Thursday morning beating both top and bottom-line estimates as well as adding 442,000 new high-speed internet customers (beating the 378,000 expectations). Despite beating expectations, CMCSA fell almost 4% by the afternoon.
What This Means For the Streaming Space
Nothing beats free, and Peacock’s free packaged deal for Comcast customers gives no reason for people not to give this new service a whirl. Its ability to continue to monetize with ads is a different approach than the rest of the streaming space (with the exception of Hulu), and advertisers are willing to pay a pretty penny for this rising form of media consumption.
Netflix’s NFLX domestic customer growth has leveled off, and so has its shares. The streaming king has shown that prolific growth can’t last forever. This stock is slowly trading towards value multiples.
Disney has had enormous success since its platform was released in November of last year. The company was able to lock in 10 million subscribers in the first 24 hours of its release, and shares have reflected this optimism. DIS is trading up at growth valuations as investors’ sentiment rises.
Apple AAPL and its newly released streaming service just won a Screen Actors Guild Award for best actress in a drama series (Jennifer Aniston in The Morning Show). All the new streaming services are starting to make a name for themselves, and there are only more to come.
AT&T is also preparing to release its all-inclusive platform, HBO Max, which will include Warner Brothers content, HBO, and several other network libraries. This will launch in May and will again further saturate the streaming space.
Streaming is taking over the world of media slowly but surely, and Comcast is pivoting to a strategy that emphasizes “slowly but surely.” Peacock is a step for Comcast in the correct direction, and with the summer Olympics coming up, the company has a lot to gain.
Right now, CMCSA is trading at a discounted multiple and would make a solid long term investment for the slow transition from cable to on-demand streaming. The critical thing to look out for is future partnerships with key networks that will enhance its streaming product offering.
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