Comcast is expanding the breadth of its Xfinity multiscreen strategy with the launch of Xfinity Streampix. Positioned as a subscription video-on-demand (VoD) service, Xfinity will bring programming and movies from ABC, NBC Universal, Sony Pictures, and Warner Bros to current Xfinity devices - PCs and Apple's iOS platform - as well as to the Xbox360 and Android devices within the year. Xfinity Streampix will be bundled for Comcast triple-play and premium-tier broadband subscribers, and will be offered as a standalone, $4.99pm subscription to all other Comcast digital TV subscribers.
Although the Streampix launch has drawn immediate comparisons to the strategies and business models employed by Netflix, Hulu Plus, and Amazon Instant Video, the comparison is erroneous, and misrepresents the thinking behind Streampix.
Contrary to pure, over-the-top (OTT) subscription VoD services - which can be accessed by any broadband-connected user within a national territory -Streampix is restricted to households which purchase Comcast services, and which access those services over Comcast's broadband infrastructure. The one strategy that Comcast is explicitly not pursuing is positioning Streampix as a pilferer of OTT's lunch; Streampix is not meant to compete in the wider market for one-off, standalone VoD subscriptions in the US.
Rather, Streampix's bundled approach is a further step in the direction of adding value to Comcast's services, and above all, protecting this value. First, out of respect for the geographic monopolies present in US cable, Streampix is not a shot across the bow of, and directly into, Cox, Cablevision, or TWC markets. Doing so would likely elicit a response from the major cable providers, and would be to the US cable industry's mutual detriment.
Second, Streampix is intended to stem the potential advance of OTT video services across Comcast subscribers' peripheral CE devices. Indeed, Streampix replaces the very need itself to resort to a Netflix or an Amazon on an iPhone or Xbox. There are several underlying strategies at work here. On the one hand, bundling Streampix - and offering it across numerous devices - is equivalent to taking out an insurance policy on the value that Comcast generates from the primary TV set. If Comcast can plug the entry-point for OTT services on peripheral devices, it can stop the spread of an OTT service from peripheral CE to primary TV set. At the same time, for wired device such as consoles, PCs, and IETVs, bundling allows Comcast to use its network infrastructure to its advantage. Unlike OTT services - whose CDN-delivered video must eventually be carried over 3rd party ISP infrastructure in the last mile - Comcast, if it wishes, is in a position to deliver IP-video over a managed data channel, from headend all the way to subscriber home. Limiting Streampix access to subscribers is a tacit nod to the value that is inherent to, and that Comcast places on, network ownership.
Third, the decision not to tread off-network and into others' markets is not uniquely motivated by respect for local monopoly. Comcast is not interested in acquiring $5pm VoD subscriptions; the operator is interested in selling large, relatively expensive, but ultimately rich bundles of linear TV, broadband, DVR services, and on-demand content across a broad range of devices. Bundling may look like an implicit tax on one-off subscriptions, but is in fact an implicit subsidy to acquiring high-value subscribers.