Comcast (NASDAQ:CMCSA) recently introduced an on-demand TV service, Fancast Xfinity TV, that enables its subscribers to watch several TV shows and movies over the internet. The service gives Comcast’s subscribers free access to about 2,000 hours of TV shows and movies from 27 networks. Currently only subscribers who subscribe to both Comcast internet and TV services are eligible for this service. Comcast has plans to open up the service to a broader set of Comcast subscribers - those who subscribe to a different internet service provider - in the near future.
We believe this a defensive move by Comcast to create greater value for existing subscribers who can access free content on sites like Hulu and YouTube. Additionally, services like Netflix allow subscribers (who pay ~$13 per month) to stream movies online and increasingly have new releases available for streaming.
Comcast’s online content selection is limited but the company has plans to add more content that will be exclusively available to its subscribers. Comcast’s recent deal with NBC, in which Comcast has acquired a majority stake, could assist Comcast in increasing the inventory of exclusive content.
Comcast's pay-TV market share has fallen from about 25% in 2006 to about 22% in 2009. You modify our forecast for Comcast’s pay TV market share to see how the company would be impacted by a share recovery.
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