The Comcast-Time Warner merger has had a lot of issues in getting off the ground. That is to be expected, considering the size of the prospective company, both in physical size and consumer reach. While Comcast has continued to argue that the new company would not impede competition, many companies have protested. Possibly the loudest has been Netflix.
Obviously Netflix has a lot to lose in this merger. Netflix already pays Comcast for decent speed, the price of which could only go up if Comcast represents a larger market. In addition to paying for speed, Comcast also has a service which is a Netflix competitor, marketed directly to Comcast subscribers and included in their cable boxes.
The service, Streampix, which was launched in 2012, has not exactly been successful. While most companies would be distressed by this fact, Comcast is using it to their advantage. In their 300+ page FCC filing, Comcast said,
Commenters try to make this a transaction-specific issue with claims that Comcast has a greater incentive than TWC to foreclose OVDs due to Comcast's Streampix offering and its more rapid migration to an all-IP network. But Streampix is not designed as an out-of-footprint, over-the-top video service, much as commenters would like to pretend otherwise. It is a branded VOD offering, available on Comcast's set-top boxes; its unique claim is simply that in assembling the service, Comcast set out to acquire full online rights as well, and highlighted the over-the-top access of the network. And though Comcast sought to create excitement around Streampix by offering the online version through a unique online site and app, and offered Streampix to a small number of Xfinity broadband-only customers in one region, these attracted minimal interest: both the site and the app are being decommissioned, and the standalone offer was discontinued. Going forward, Streampix will simply be part of the Xfinity TV app and website like other VOD offerings.
So, according to Comcast, because Streampix has not had a lot of success, it should not be considered a legitimate competitor to Netflix. Therefore, they will argue that some, if not all, of Netflix's whining about unfair business practices are overblown.
Unfortunately for Comcast, that isn't exactly how things work. The fact that they actively work to sign exclusive streaming deals does make them a competitor. In addition, they plan to roll the service into their Xfinity offering, meaning that it will be easier to access and included in their existing mobile apps. In addition, it is already available on Comcast devices, making it easier and more direct that Netflix for Comcast customers.
With that, it makes all of Netflix's comments not only valid, but important. The FCC will need to take their issues into account before approving or disapproving of the merger. As we know, a merger this large can fail and cost a fortune. This is because of the intense effect on the market. No wonder both sides are fighting so hard.