Comcast to take on Netflix with Web video service

The offices and studios of Comcast Entertainment Group which operates E! Entertainment Television, the Style Network and G4 network is pictured in Los Angeles November 12, 2009.

(Reuters) - Comcast Corp, the No. 1 U.S. cable operator, became the latest major name to take on Netflix Inc on Tuesday when it announced plans for an online video service offering a library of TV shows and movies.

The new service, called Xfinity Streampix, will be made available only to Comcast's cable TV subscribers. But the service could also operate as a standalone service outside of the cable subscription package under programming agreements it has with some of the partners that supply it with shows and movies, according to a person familiar with the plan.

Comcast executive Marcien Jenckes said the company has no plans to launch a standalone service and will instead complement the 75,000 TV shows and movies already available on-demand via customers' cable boxes.

Streampix will come free with Comcast's top video packages and for an extra $4.99 a month in lower tiers.

Comcast is launching Streampix with TV shows and movies from partners including Walt Disney Co, Time Warner Inc's Warner Bros, Sony Pictures and NBC Universal, which it owns.

Plans for Streampix come just weeks after Verizon Communications said it would create a joint venture with Coinstar Inc's Redbox to offer online video and DVD rentals separate to its FiOS service.

Google Inc and Amazon.com Inc are also working on plans to launch their own online video services.

Netflix has built a subscriber base of some 24 million subscribers by offering a package of older TV shows and movies, and investors in cable TV fear that customers will start dropping the more expensive TV packages in favor of Netflix.

Comcast already offers millions of hours a month of on-demand video through its cable boxes but online video allows additional flexibility. For instance, it can offer entire seasons of popular TV series like "30 Rock" and "Grey's Anatomy" - a feature that has been popular with Netflix users.

"There's clearly a lot of demand for library content like favorite TV services," said Jenckes. "We've seen other companies launch very successful products in this space and we recognize this is something the marketplace wants."

(Reporting By Yinka Adegoke; Editing by Gary Hill)