Comcast Corporation (CMCSA), the largest cable MSO in the U.S., announced that it will launch its new cloud-based smart TV service – X1 – in Boston. We see the company’s rollout of this service as an attempt to improve its declining video customer base.

Comcast’s new X1 service is the result of the company’s efforts to introduce innovative products to the market using the IP technology. The main features of X1 service include the company’s new cloud-based navigation system, a main-screen user interface, a recommendation engine; a DVR set top box, and a smart remote control.

The most unique feature of the X1 service is its remote control application for iPhone and iPods. It also includes a virtual keyboard which will help the customers to search and play from thousands of on-demand videos, control the DVR and connect with social media applications.

The remote application will allow the customers to swipe through their interactive TV guides on their television screen by using their ipad or iphones as a remote control. Additionally, a customer can pause a video on-demand by just shaking the device.

Comcast has lost 37,000 residential video customers in the first quarter based on the ongoing macroeconomic fluctuations in the U.S. Further, the company faces stiff competition from telecom service providers like Verizon Communication Inc. (VZ) who are capturing market share from Cable MSO’s by offering fiber-based TV to its subscribers. We believe that increased competition has propelled the launch of this service and the company will use this platform to regain and retain its lost customers.

Comcast is launching this service in Boston, but also has plans to launch it in several markets during the course of the year. The service will be initially offered to the triple pay customers at no additional cost but eventually, it will be rolled out to all customers, thus replacing the current service.

Recommendation

We are maintaining our long-term Neutral recommendation on Comcast Corporation. Currently, Comcast Corporation has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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