By Lisa Beilfuss
Comcast Corp. said Monday that it will launch a new $15-a-month
streaming video service, the cable giant's first major move to
offer TV over the Web to people who don't want a big bundle of
cable channels.
For now, the service, dubbed "Stream," will consist of local
broadcast stations and HBO--leaving out cable channels like ESPN,
AMC and Fox News. It will also include "thousands" of on-demand
movies and shows as well as a cloud-based digital video
recorder.
There are several limitations, however. It will only be
available to Comcast's broadband customers. Stream will launch in
Boston later this summer, followed by Chicago and Seattle later
this year, the company said in a blog post. Comcast said it is
planning a rollout to its entire footprint next year.
That approach differs from Dish Network Corp.'s Sling TV and
Sony Corp.'s PlayStation Vue Web TV services, which are available
nationwide to anyone with a broadband subscription. A Comcast
spokeswoman said Monday that the company has no plans to roll out
the service to areas where it currently doesn't offer cable TV.
The Stream service itself is unlikely to be very profitable for
Comcast, but it could encourage customers to sign up for faster,
more expensive broadband subscriptions, and allow the company to
collect more revenue from "cord-cutters" who have dropped
traditional cable TV subscriptions. The trick will be to pull off
that feat without encouraging more customers to downgrade from
high-price cable TV packages.
At launch, the service won't be accessible through streaming
media devices like Roku, so customers won't be able to watch shows
on their TV sets. The spokeswoman said Comcast is focused for now
on catering to younger consumers who want to access content on
laptops and mobile devices, though the company could explore ways
to make it available on the TV set if that is what customers
desire.
The new Stream service is a Web equivalent to the "Internet
Plus" cable TV-and-broadband package Comcast already has in the
market today, which offers fast broadband, a handful of broadcast
networks and HBO.
Factoring in the cost of a broadband subscription, Stream may
even be more expensive than the cable TV alternative. Buying Stream
plus a 25 megabits-per-second broadband subscription from Comcast
at $67 a month would amount to $82 a month. In comparison,
Comcast's "Internet Plus" package, which offers a handful of local
broadcast stations and HBO along with the same broadband speed,
costs $45 a month for the first year and increases to $65 a month
in the second year.
The spokeswoman said Comcast is looking into creating some
promotional broadband offers for Stream. Stream could also explore
offering add-on packages of sports or children' channels, the
spokeswoman said, similar to what Sling TV offers today.
Comcast said it would count Stream customers as video
subscribers when it reports earnings. Because it is classifying and
treating Stream as a cable TV service, the operator is also
exempting it from its data usage thresholds--as it does for its
Xfinity video-on-demand app on the Xbox gaming console. That means
consumers can binge on Comcast's streaming video and won't have a
pay a surcharge even if they surpass thresholds that Comcast
enforces in several markets at 300 gigabytes a month.
That practice has raised outcry in the past from the likes of
Netflix Inc. Chief Executive Reed Hastings, who complained a few
years ago that it was unfair for Comcast to exempt its own Xbox app
and penalize others' like Netflix.
Comcast has maintained that its streaming apps in the home, just
like traditional cable TV service, travel over a private, managed
network-a separate portion of the pipe from public Internet
traffic-and therefore need not count toward data usage.
In its latest Open Internet rules, the Federal Communications
Commission allowed broadband providers to treat such services
differently from public Internet traffic. The FCC said, however,
that it is "especially concerned that over-the-top services offered
over the Internet aren't impeded in their ability to compete with
other data services." The agency said it would closely monitor the
development of such services.
Comcast has dabbled in offering streaming services before. A few
years ago, it debuted Streampix, an add-on streaming service that
it marketed to existing cable TV customers. In partnership with
some college campuses, it has been marketing a streaming TV service
with about 80 channels that is free to students with room and
board.
Comcast said last September amid its regulatory review for its
failed bid to buy Time Warner Cable that it had looked at launching
a national Web service "from time to time" but had "not been able
to find a viable business model," in part because of the
"difficulty of obtaining national programming rights."
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com
and Lisa Beilfuss at lisa.beilfuss@wsj.com
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