) are at an early stage of discussion to enable Comcast's
subscribers to buy products featured in television advertisements
and pay via eBay's PayPal payment service. We believe that this is
an effort by the company to compensate for the loss sustained from
over-the-top video segment.
As part of the collaboration agreement, viewers with a PayPal
account will be able to buy a product being advertised on
television, donate money to political campaign and non-profit
organization. Additionally, they can also ask advertisers to text
information to their phones regarding a product and can collect
coupons through PayPal to shop in retail stores like
Home Depot Inc.
Though innovative, this type of Enhanced TV Binary Interchange
Format (EBIF) is not new for Comcast subscribers. The company
already has an application that supports
) Shop By Remote product and can run on any type of set top
PayPal has already signed a similar deal with
). Further, this deal with Comcast is an attempt by the online
shopping giant to grab significant market share of the TV commerce
business. Last year, PayPal came up with a similar application for
) iPad customers. According to Nielsen Co., on an average, the U.S.
consumer watches 34 hours of television per week, among which 49%
of them are ready to embrace the idea of making purchases through
We believe that this is a win-win situation for both the
companies. Cable companies like Comcast Corporation, which has been
trying this EBIF format for long, now has the support of its
interactive platform, X1.
Furthermore, the cable MSO's will be able to take in higher fees
for ads, since they would give the customers the ability to
purchase from the television, and thus offset the reduction in
revenue from other sources. On the other hand, PayPal, which
already has 20% of the global e-commerce sales, can improve its
registered customer base through the deal and can increase its
topline by charging transaction fees for the service.
We maintain our long-term Neutral recommendation on Comcast
Corporation. Currently, Comcast Corporation has a Zacks #3 Rank,
implying a short-term Hold rating on the stock.
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