Charter in Talks About Licensing Comcast's X1 Platform
Charter Communications has held discussions about licensing Comcast's X1 platform, but the cable op currently remains committed to its own next-gen video platform and video user interface, Charter Chairman and CEO Tom Rutledge said Tuesday on the company's Q1 earnings call.
That Charter is even remotely open to syndicating X1 is a bit of a bombshell given the resources and development Charter has spent on its own next-gen WorldBox devices and a cloud-based user interface for new and legacy boxes developed in tandem with ActiveVideo, the Charter-Arris/CommScope cloud video joint venture.
"We have a good relationship with Comcast," Rutledge said, when asked for an update on Charter's thinking with respect to the possibility of licensing X1. "We've had discussions with them about licensing their X1 platform and their new IP video platform. If we can make that the best platform for us, we'd certainly be willing to do that."
But Rutledge noted that Charter still likes its own UI and the ability to change and tweak it at its own pace.
At the same time, an X1 syndication play would have to "check all the boxes" in areas such as flexibility and low costs. "To date, we haven't been able to do that," Rutledge said.
Comcast's X1 syndication strategy has had some success with other Tier 1 North American operators via agreements with Cox Communications and three Canadian MSOs -- Rogers Communications, Videotron and Shaw Communications. X1 features a cloud-based guide, support for cloud DVR services, a voice remote/navigation system and integration of popular OTT apps such as Netflix, Tubi, YouTube and Amazon Prime Video at the set-top box.
X1 syndication partners get access to those capabilities, but likewise cede a degree of control of their video product roadmaps and engineering to Comcast. On the other side of it, those partners get access to some significant scale benefits that they can't achieve on their own.
Charter could be giving more thought to X1 as it seeks out ways to reduce video subscriber losses. In Q1, Charter shed 145,000 video customers, ending the period with 15.95 million. That's worse than the loss of 82,000 video subs expected by StreetAccount consensus, MoffettNathanson analyst Craig Moffett said in a research note. Charter's video base is declining at a rate of 1.7%, still below the 4% rate of the broader pay-TV industry, he added.
Rutledge acknowledged that the pay-TV business "has its challenges," but said video remains integral to Charter's product strategy.
"The macro trend, I think, is video is going to decline. The question is how fast," he said. "But we still think video is a driver for us in terms of customer creation."
He said pricing on the video "big bundle" has contributed to declining pay-TV subscriber trends. Charter has been responding with the recent launch of slimmed-down streaming packages targeted at broadband-only subs.
- Charter Preps Launch of OTT-TV Service Sans Local Broadcast, Sports Nets
- Charter Launches App For Apple TV
- Arris, Charter Nab ActiveVideo for $135M
- Charter Deals Arris In on WorldBox 2.0
- Rogers Nets 100K X1-Based Video Subs in Q1, but Pay-TV Base Declines
- Comcast Adds Tubi to X1's OTT Video Blend
— Jeff Baumgartner, Senior Editor, Light Reading