Why Comcast Will Crush Netflix
I’m sitting in my rental car outside of eBay headquarters on a rainy day in San Francisco. I’m about to step into my second day delivering an Outthinker workshop to group of technology execs from various companies. Television news here centers on the rapidly reorganizing technology landscape: the Yelp IPO, Yahoo suing Facebook during its pre-IPO quiet period.
But the most game-changing technology news has gone mostly overlooked. Comcast, the largest U.S. cable service provider, announced it will soon launch a video-streaming service aimed at beating Netflix. It’s easy to miss the strategic importance of this move. But if you understand the strategic narrative that cable companies have played again and again to devastating effect, you will recognize this as the critical turning point in the plot.
The battle to own the “digital home” has been waging for years, but over the past 12 months, it has really heated up. Apple is rumored to be launching a television, Amazon’s video-streaming business is taking off, Samsung and other electronics firms are embedding ever more online video services into their TVs, and television channels are increasingly streaming directly. How this all plays out will have significant consequences for investors and television viewers around the country.
The future may look uncertain, but look to the past and you will see a pattern that points clearly to where things may be going. A shift is underway. Cable companies look poised to turn the tables on Netflix and other video streaming players. The recent relative stock performance of Comcast and Netflix underscores that this is happening (see the stock chart below). That in a few days Netflix will lose its rights to carry Starz video content, including my daughter’s favorite Disney films, offers yet more evidence.