Wednesday, February 22, 2012

Comcast Remarkably May Use Competitor Pipes to Fight Netflix -- Doing a Tom Petty

We've all listened to Tom Petty's classic hit "I Won't Back Down" in moments of defiance. Comcast apparently has too.

Not satisfied with being relegated to "dumb pipe" status -- despite a strong business case for focusing on the provision of higher-margin broadband services -- Comcast has entered the ring to fight Netflix head on. In the challenger's corner, we have Comcast's new hoped-for Netflix killer, "Xfinity Streampix."

Comcast's new service goes well beyond its current video-on-demand offerings for its subs. Netflix-ian content will be available on demand (think of TV back catalog, etc.) both on TVs and Internet-connected devices. And, Comcast is charging $4.99/month versus Netflix's $7.99/month for a similar offering -- although, those customers in higher-paying cable content packages will get this new service for "free" as part of their overall Comcast subscription.

Not convinced yet about Comcast's passion to win here? Here's the kicker. While Comcast is launching its new service only to its current cable customers (i.e., in those territories in which it provides cable services), the company has negotiated nationwide content distribution rights. That's right, Comcast will now be able to expand its physical footprint to the entire U.S. -- just like Netflix and others do. That means -- yes, you guessed right -- that Comcast ultimately can (and will!) become an OTT service riding on the broadband of competing cable companies!

Chew on that for a second! Comcast has fought tooth and nail for years with Internet TV/OTT services like Netflix and Hulu -- exerting tremendous pressure on content providers NOT to provide their content to those services which disrupt its own biz model. And, Comcast, of course, launched its closed "TV Everywhere" IPTV initiative (as did other big cable companies) to limit the online availability of that premium content only to those customers already paying for cable.

Xfinity Streampix has the potential to cast all that history aside -- and using the broadband services of competitors to boot! If you can't beat Netflix, join 'em!

This may be a smart move -- especially because Comcast also is a major producer of premium content of course (NBC Universal) -- but that makes it no less remarkable. Comcast's new Xfinity Streampix service has the potential to represent a remarkable 180 degree turn of events.

Comcast has a "dumb pipe" complex -- let's see if this ultimately is a smart move ....