Markets

Comcast Embraces the Skinny Bundle With Its New Streaming Service

Source: Comcast.

The increasing numbers of cord-cutters and cord-shavers are changing the greater television industry. After years of labeling the cord-cutting trend as "pure fiction," television metric firm Nielsen recently reported that television viewing on traditional TVs continues to decrease.

In Nielsen's Q1 2015 Total Audience Report, the company reported that traditional TV is falling in both total viewing time and in entertainment market share , as it struggles to compete with growing smartphone usage.

When looking at demographics, the numbers look even more ominous for pay-TV. For adults over 50, traditional TV was the dominant viewing format, with nearly 50 hours of viewing per week. By contrast, adults ages 18-34 spend less than 22 hours per week watching TV, with an additional 19 hours coming from Internet-based media: PCs, smartphones, and tablets.

For both cable providers and networks, this is an obvious conundrum. On one hand, traditional, large-package TV bundles are a lucrative business model. On the other, however, growing numbers of subscribers are moving away from traditional TV, and it would be unwise to not try to offer tailor-made streaming solutions for these viewers, especially for cable providers that could lose out on the opportunity to shape these nascent solutions.

DISH Network has emerged as an early leader with its Sling TV service, and now Comcast is following with a streaming service of its own.

Meet Comcast's newest streaming service: Stream

While noting the changing ways that viewers are consuming content, Comcast announced its new streaming video service, dubbed Stream (a working title, I guess). The service boasts of no extra device or additional equipment required, and at $15 a month, it comes in cheaper than Sling TV's $20. The service will provide broadcast networks ABC, CBS, Fox, NBC, and CBS, along with premium channel HBO.

However, there are some differences between these two services. On the channel format, The New York Times reports that Comcast's service will not include ESPN, a huge blow for those looking for sports without the large cable package. Perhaps that's a reason for the lower price, as ESPN is by far the most expensive cable channel. This could make Comcast's service a great deal for cord-cutters who aren't terribly interested in sports.

In addition, unlike DISH's Sling TV, which is Internet-provider agnostic, Comcast's Stream is only available to its Comcast Xfinity Internet subscribers. By only offering Stream to people with Comcast's Internet service, the company can potentially position Stream as a differentiator for its Xfinity service and perhaps add Internet-only subscribers.

Continued strain on the business model

The risk in this offering, of course, is that there will be a massive trade-down of subscribers that will choose Stream over the standard Comcast pay-TV package they are accustomed to. However, I think we're still far from a wide-scale defection to streaming TV -- otherwise a flood of customers would have already signed up for DISH's Sling TV.

Some networks have also negotiated to pull their channels from streaming offerings if they become too popular , essentially limiting these offerings from becoming too big. For example, Disney 's ESPN negotiated with DISH's Sling TV an exit clause that would allow it to pull its programming if it lost more than 3 million households after May 2014 -- and it's now within its right to drop out, as it has lost 3.2 million subscribers in that timeframe.

Nevertheless, Comcast's move shows continued strain on the traditional TV market of yesteryear. And, yes, this is probably not a game-changer, but it does signify that even cable behemoth Comcast is looking to court cord-cutters and cord-trimmers.

3 Companies Poised to Explode When Cable Dies

Cable is dying. And there are 3 stocks that are poised to explode when this faltering $2.2 trillion industry finally bites the dust. Just like newspaper publishers, telephone utilities, stockbrokers, record companies, bookstores, travel agencies, and big box retailers did when the Internet swept away their business models. And when cable falters, you don't want to miss out on these 3 companies that are positioned to benefit. Click here for their names. Hint: They'renot the ones you'd think!

The article Comcast Embraces the Skinny Bundle With Its New Streaming Service originally appeared on Fool.com.

Jamal Carnette has no position in any stocks mentioned. The Motley Fool both recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

DISH CMCSA

Other Topics

Stocks

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More