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How Sky Deal Could Help Comcast Compete with Netflix

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Sky acquisition

Comcast (CMCSA) recently defeated rival bidders 21st Century Fox (FOXA) and Walt Disney (DIS) to win full ownership of Sky, the largest European satellite broadcaster. The ~$54.1 billion Sky deal is expected to boost Comcast’s customer base, help it expand globally, and improve its position in the fast-growing streaming space. The SVOD (subscription video on demand) market has been developing rapidly and is expected to touch $108.6 billion by 2026, according to Future Market Insights.

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Rising demand for online streaming services

Comcast has been witnessing declining video customers for the past five quarters due to cord cutting. Online digital streaming services from tech giants like Netflix (NFLX), Amazon’s (AMZN) Amazon Prime, and YouTube, are attracting traditional cable subscribers with lower prices. Netflix has delivered hit shows like Stranger Things and The Crown. Amazon shows like Man in the High Castle and The Marvelous Mrs. Maisel have also been hits. With YouTube TV, subscribers can get unlimited cloud DVR storage.

The Sky acquisition would give Comcast original TV productions such as the 1920s sex-and-crime saga Babylon Berlin, as well as Britannia. Also, Sky has a growing video-streaming business, Now TV. The service has about 2 million customers and is expected to compete with Netflix around the globe.

Meanwhile, the Sky deal would add millions of European subscribers to Comcast’s customer base. Comcast is reportedly expected to deliver TV services to 52 million customers in the US, the UK, Italy, and Germany, and add sought-after programming such as the rights to Premier League English soccer. In comparison, Netflix has relied on other companies’ broadband networks to distribute its in-house premium content and expand its global subscriber base to 130 million.

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