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Alphabet (GOOGL) Launches YouTube TV in Five Metro Areas

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Alphabet Inc. (GOOGL - Free Report) took the wraps off its own streaming video service YouTube TV yesterday.

The service will initially be available in large metro areas such as Los Angeles, San Francisco, New York, Chicago and Philadelphia. More U.S. cities will be added, going forward.

Though the news didn’t move the needle much for the stock (closed at 848.91, down 0.4%), over the last six months, it has outperformed the Zacks Internet-Services industry. It returned 6% compared to the industry’s gain of 2%.

Competitive Pricing

The YouTube TV subscription service offers over 40 channels alongside YouTube videos and YouTube Red original content for $35 a month.

It underscores Alphabet’s continuous efforts to launch products and services for multiple industries.

With the new move, Google is entering a crowded and highly competitive market marked by the presence of AT&T’s (T - Free Report) DirecTV Now, Dish Network’s Sling TV and Sony’s PlayStation Vue.

The company appears to have its strategy in place. The low price tag will certainly place its competitors in a spot of bother.

As the company generates significant cash from operations and also holds a huge cash balance, management has the flexibility to pursue growth in any area that exhibits true potential. This flexibility, along with its technological prowess allows it to pursue opportunities in different markets, offsetting the late-mover disadvantage.

Alphabet Inc. Net Income (TTM)

Attractive Features

Alphabet has reached agreements with cable networks like CBS, ABC, NBC, CW, Twenty-First Century Fox and others. In addition, there are affiliated cable channels like CNBC, ESPN, MSNBC, Disney Channel, Fox Sports and its FS1 and FS2 affiliates, Fox News and others.

The company said that it will add BBC America, AMC, WE tv, IFC, Sundance TV and BBC World News going forward, at no extra charges. Shudder and Sundance Now, however, will be accessible for an additional fee.

Notably, YouTube TV offers some attractive features at a low price point. The subscription can be shared among six accounts, each of which comprises a profile, personalized recommendations and a personal library. A member’s experience will not get disturbed by the preferences of others.

Other facilities include live programming and fast-forwarding on pre-recorded shows to skip ads. The biggest differentiator seems to be the cloud-based DVR component that allows unlimited storage in the cloud for up to nine months.

YouTube TV is accessible through smartphone, tablet and laptop browsers. Watching on television requires Google's Chromecast. Alphabet is offering a free one-month trial and a free Chromecast to early subscribers.

Not Free from Loopholes

Alphabet didn’t strike deals with Discovery, Turner, Viacom, A&E and AMC, which means that subscribers are missing out on History, Comedy Central, HBO, CNN, TNT, TBS, AMC and so on.

Though YouTube had unveiled plans to expand the service as quickly as possible, for the time being, viewers from only the places where YouTube offers full live local broadcast feeds will be able to avail it. There are no international expansion plans currently.

At present, Alphabet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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