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Comcast, Facebook Join the Streaming War, Roku Shares Fall

Zacks Equity Research

The video streaming market is getting crowded with Comcast CMCSA and Facebook FB recently unveiling their respective plans to jump into the booming space. According to Grand View Research, the video streaming space is expected to be worth $124.57 billion by 2025, witnessing a CAGR of 19.1% between 2018 and 2025.  

The solid growth prospects have attracted prominent tech and media companies like Apple AAPL, AT&T and Disney DIS to the space, which is already seeing intense competition among incumbents like Netflix NFLX, Hulu, Amazon AMZN and Roku ROKU.

Notably, the spate of recent announcements has been a dampener for Roku. The stock has lost 9.9% since Sep 10, when Apple TV+ pricing was announced.

Moreover, Comcast’s plan to offer Internet users a free streaming media set top box compatible with other services and Facebook’s Portal TV announcement also hurt Roku shares, which dropped 13.7% to close at $129.88 on Sep 18.

 

Price Movement Since Sep 10



 

NBCUniversal Names Streaming Service Peacock

Comcast owned NBCUniversal's new streaming service called Peacock is expected to debut in early 2020 with an array of original programs including Dr. Death featuring stars like Alec Baldwin and Demi Moore.

Additionally, the company has also attained exclusive streaming rights to popular NBC shows like Parks and Recreation and The Office to name a few. The lineup also includes original comedy Rutherford Falls and reboots of shows like Battlestar Galactica, Saved by the Bell and Punky Brewster.

Reportedly, the service will also host other NBCUniversal content including Saturday Night Live, 30 Rock, The Good Place and Universal Pictures movies including the Bourne, Despicable Me and Fast & Furious franchises.

However, details of pricing and distribution of the streaming service will be disclosed as the launch appears. An earlier report suggests that the ad-supported service will be free for NBCUniversal pay-TV subscribers.

Facebook’s Portal TV Can Be a Game Changer

Facebook launched new models of its Portal home video chatting devices namely, Portal Mini, Portal and Portal TV for the U.S. and Canada markets. The company is set to expand its TV hardware line-up in the UK, France, Italy, Spain, Australia and New Zealand.

The devices enable users to make video calls over WhatsApp and Facebook Messenger on television through built-in cameras and microphones. Additionally, new Portal devices feature support for Amazon’s Alexa.

Moreover, Portal TV’s exclusive incorporation of video and music streaming services is a game changer. The device is priced at $149 and will be shipped from Nov 5.

Users can stream videos from Amazon Prime Video and also download other apps like SHOWTIME, CBS All Access, Starz, Pluto TV, Red Bull TV and Neverthink. Additionally, music streaming apps available on Portal TV include Spotify, Pandora and iHeartRadio Family.

Per Information report, Facebook has approached Netflix, Disney and other media companies including HBO and Hulu to add their streaming services on Portal TV.

Pricing War Intensifies Amid Stiff Competition

Price war is set to intensify as the video-streaming space gets increasingly crowded. Apple’s rock bottom pricing of $4.99 for Apple TV+ is set to heat up competition in the streaming market.

Disney is set to launch (Nov 12) Disney+ at $6.99 a month and a Disney+, ESPN+ and Hulu bundle for $12.99 a month.

Comcast’s Peacock is expected to cost $10 a month, still cheaper than Netflix’s offering of $12.99 per month. In this category, Amazon Prime is also priced at $12.99 per month.

Battle to Gain Exclusive Rights

Competition to gain exclusive rights to classic TV shows has intensified among streaming service providers.

While Netflix acquired Seinfeld rights, Hulu grabbed the rights to ER. Disney, Amazon Prime and HBO Max were able to secure rights to The Simpsons, Sex and the City, and Friends and The Big Bang Theory, respectively. Peacock acquired exclusive rights to The Office.

However, this move is proving to be costly for the industry at large. Per Wall Street Journal report, these streaming houses have already spent more than $2 billion on acquiring exclusive rights to classic television shows and artist tie-ups.

Zacks Rank

Comcast, Facebook, Apple, Netflix, Roku and Amazon currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, Disney carries a Zacks Rank #5 (Strong Sell).

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