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Comcast Spreads IP Video Love

Alan Breznick
10/30/2013
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Although its core video customer base continues to shrink, Comcast is racing to roll out IP video and other advanced video services to more subscribers, including some controlled by other cable providers.

During the MSO's third-quarter earnings call Wednesday morning, Comcast Corp. (Nasdaq: CMCSA, CMCSK) Cable president and CEO Neil Smit said it has introduced its next-gen X1 IP video platform in 90 percent of its service area. Plans still call for extending X1 to 100 percent of its footprint by yearend. Comcast is also proceeding with plans to launch a more advanced version of the IP-based programming guide and user interface, X2, in select markets by yearend. The company will deploy X2 "more aggressively" in 2014.

Further, Smit said that executives at the MSO are continuing to hold discussions with other cable operators about licensing the cloud-based X1 platform to them. "We've had interest expressed by a number of MSOs," and there would be benefits to scaling the service to more cable homes. "We're considering the opportunities."

As he did on Comcast's previous earnings call, the CEO cited some early benefits from the nationwide rollout of X1. Both video-on-demand (VOD) viewing and transactions have surged at least 20 percent in X1's initial markets. "We're very pleased with the VOD results. We think that VOD is a very powerful platform." In addition, 60 percent of X1 subscribers are using their new TV apps weekly. Over the past quarter, hours viewed via the company's Xfinity TV Everywhere app have ballooned from 2 million to 6 million.

As a result, Comcast is heavily marketing X1 across the US. That's particularly true in larger markets where the MSO competes with Verizon Communications Inc. (NYSE: VZ)'s FIOS TV or AT&T Inc. (NYSE: T)'s U-verse TV service, which have both been adding video subscribers by the bunches, presumably at cable's expense.

"We're aggressively deploying X1," Smit said, when asked by analysts about his company's response to U-verse's recent expansion to 1.5 million more homes in the MSO's footprint. "We think we have a superior product, and we'll continue to market it."

At the same time, Comcast is deploying its new wireless gateway devices and community WiFi hotspots aggressively across the nation. Smit said it has installed 6 million broadband gateways in subscriber homes, effectively creating public WiFi hotspots in each household. "We will continue to build out our WiFi network. We think it's a great consumer benefit."

Under further questioning by the analysts, Smit brushed aside news reports that Comcast and other major US MSOs are talking to Netflix about placing its streaming media service on cable set-tops. Without denying the reports, he expressed surprise at "the high amount of press coverage" the story has received. (See: Netflix-MSO Deal in the Works?.)

He also said he had nothing new to add on the subject. "It's not a high priority for us. Our customers can receive Netflix in a number of ways."

When asked about Internet Plus -- Comcast's latest pilot of a broadband video bundle that combines broadband service with a limited basic cable lineup, HBO, and the Streampix streaming media service -- Smit said it is targeted at video subscribers "primarily interested in a good Internet and light video product." Comcast has previously launched similar products to reach "millennials," including Blast Plus and Blast Extra. "It's very fluid, but we're working hard with our programming partners to target new customers and new services."

In its quarterly earnings report, Comcast reported strong subscriber and revenue gains on the broadband, voice, and especially business services fronts. We'll have more on those gains in another story shortly.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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albreznick
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albreznick,
User Rank: Blogger
10/31/2013 | 5:58:36 PM
Re: capex going up
No, Mark. Unfortunately not. Cable cos don't like to give out that kind of info usually. But I'll keep you posted if I find out. 
albreznick
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albreznick,
User Rank: Blogger
10/31/2013 | 5:57:02 PM
Re: X1
Good question, Dan. Well, probably not the Time Warner Cables and Coxs of the world. But more mid-sized and smaller cable operators would seem to be good candidates. Msy all depend on the licensing fees that Comcast wants to charge.

 
albreznick
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albreznick,
User Rank: Blogger
10/31/2013 | 5:55:17 PM
Re: capex going up
That's a good point, Ping. I don't know if the cable cos can reach that next generation either, particularly with video subscription products. For a while, I've thought that the real problem for MSOs is not cord cutters, but younger folks who never get the cord to begin with because they don't see a good reason to do so. So I think the focus may shift to broadband in a big way.  
sam masud
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sam masud,
User Rank: Light Sabre
10/31/2013 | 2:15:43 PM
Re: capex going up
Alan,

I wonder sometimes whether anything the MSOs or any IPTV provider does is sustainable in the long run. It just seems that the Tweet generation (Tweeties?) is just not into the traditional TV format. And I don't see these operators becoming like the OTT players, not unless they want to commit suicide.

 
MarkC73
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MarkC73,
User Rank: Light Sabre
10/31/2013 | 11:31:56 AM
Re: capex going up
Any discussion on what vendor's gear they are using for the datacenter, infrastructure, or MSO?
DOShea
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DOShea,
User Rank: Blogger
10/30/2013 | 9:48:14 PM
X1
Who would be the candidates to license the X1 platform? Are we talking much smaller companies in markets Comcast doesn't care about itself?
albreznick
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albreznick,
User Rank: Blogger
10/30/2013 | 3:09:58 PM
capex going up
Is it any wonder that Comcast's capex is climbing at a steady clip this year? Between the new set-tops and gateways, Comcast is trucking new boxes into the home by the boatload right now. But Wall Stret doesn't seem to mind, at least not so far.   
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