) served 2.4 billion hours of on-demand-video to its customers in
2012, registering growth of 15% over 2011. The company has been in
the on-demand video business for a while now and has witnessed
significant success in terms of video consumption. However, the
market exists for both, individual pickings as well as
all-you-can-eat models, and Comcast seems to be positioned to
capitalize on both with its traditional on-demand and Xfinity
Usually, a company resorts to either subscription or
an a la carte
model, but Comcast is keeping both to balance its risk. Its
on-demand views have grown strongly and there is an opportunity to
increase shareholder value with the success in subscription
streaming. Given that Comcast has close to 22 million pay-TV
subscribers, 2.4 billion hours imply that each Comcast customer is
on an average watching over 9 hours of on-demand video every
See our complete analysis for Comcast
How Have On-Demand Views Grown In The Past?
Comcast started its on-demand video service in 2003, and since,
the the total number of views have grown by a staggering amount.
The company stated that its cumulative on-demand views reached 11
billion in 2009. This figure further increased to 20 billion within
a span of two years. This implies that between 2009 and 2011,
Comcast's customers were generating roughly 375 million on-demand
views per month. The figures imply big numbers!
However, the flip side is that the number of views are not
necessarily the indicator of exactly how much of the content
Comcast's customers are really watching. The number of viewing
hours is a better metric - this stood at a monthly rate of
for Netflix (
) in June 2012, clearly indicating a high demand for alternative
video services. Compared to this, Comcast's customers are watching
200 million hours every month of on-demand video. There is a clear
opportunity to fill this gap and in the process, generate
How Can Xfinity Streampix Add Value?
There is no doubt that the subscription model is picking up, and
this prompted Comcast to launch its own streaming subscription
service in early 2012. Xfinity Streampix's success can lift
Comcast's value by as much as 10%.
For a little over 2 million subscribers, the Xfinity Streampix
available for free
. For the rest, Comcast is charging a monthly fee of $4.99. If we
assume that Comcast's streaming service can gradually penetrate 50%
of its total subscribers by the end of our forecast period
(including the ones who get it for free), the additional profits
will lead to a around 5% upside to our price estimate for Comcast.
However, there is additional value to be unlocked from improved
Comcast has been struggling with its pay-TV subscriber losses
for the past few years as a result of tough competition from the
satellite companies and telecom operators. To compensate for this
loss, Comcast has pushed its broadband and VoIP service, which has
certainly helped. However, augmenting the existing services with
enhancements such as online streaming can help Comcast's pay-TV
business to a great extent. We see potential upside of 5% to our
price estimate, if Comcast can regain about 2 percentage points of
the market share by the end of our forecast period.
Therefore, we conclude that while neither of the above two
values are significant in themselves, combined can lift Comcast's
value by around 10%, which is a notable on top of our $46 price
estimate for Comcast stands, implying currently implies a premium
of about 15% to the market price.
How a Company's Products Impact its Stock Price at