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Video Playing 'Supporting Role' as Comcast Focuses on Connectivity

Video is playing more of a "supporting role" than in years past as Comcast continues to put more focus on its higher-margin, faster-growing "connectivity" efforts, company chairman and CEO Brian Roberts said Wednesday at the Goldman Sachs Communacopia Conference in New York.

"We're going to compete for video, but we want to compete for profitable video, and I think that's a change," Roberts said later when asked later to expand on the role of video at Comcast Corp. (Nasdaq: CMCSA, CMCSK) amid competition with traditional pay-TV rivals along with a slew of newer OTT-TV entrants.

He said Comcast has "withstood the first wave" of virtual MVPD competition as some of those providers start to raise and adjust their pricing, and believes that some of that threat will be mitigated as Comcast exits 2018 and improves on its ability to retain its best, most profitable customers.

Its X1 platform will continue to play a big role in that, as Comcast continues to integrate OTT services such as Netflix, YouTube and, soon, Amazon Prime and position itself as an aggregator of aggregators. "We don't care whose content you watch… just watch it through our X1 experience and we're going to be a winner," Roberts said. (See Amazon Prime Video to Stream to Comcast's X1 Boxes.)

Back to Comcast's pivot to focus on being a "connectivity business," at least from the cable end of the company, Roberts talked up an internal strategy called "Broadband 2.0."

While speed was the name of the game early on, Broadband 2.0 will continue to focus on adding capacity, but be complemented by advanced gateways, extending coverage in and out of the home (with WiFi extenders and its new mobility offering), and providing a management system that ties it all together. (See Comcast Unlocks xFi-Powered Smart Home and Why ISPs Are High on Whole-Home WiFi.)

Comcast is also wary of the threat posed by 5G-based fixed wireless home broadband services. (See Verizon to Launch Fixed 5G Service on Oct. 1 and 5G Fixin' to Become 'Largest Existential Threat' to Broadband Providers – Analysts.)

"We love our competitive position in broadband," Roberts said, noting that capacity will continue to be a "huge part" of Comcast's connectivity roadmap. "We're certainly not looking to cede that in any way."

Comcast is also using its relatively new Xfinity Mobile product to drive broadband. Comcast is bundling broadband with Xfinity Mobile, which is underpinned by an MVNO deal with Verizon Wireless and ended Q2 with about 780,000 customer lines.

"I think we're a meaningful competitor" even though Comcast's mobile business is in the nascent stage, Roberts said. "We see a good runway."

Roberts was also asked about how important a role M&A has at Comcast after it dropped out of the running for 21st Century Fox but continues in its pursuit of Sky . (See Fox's Sky Offer Doesn't Trump Comcast's, but Could Extend Bidding War.)

He said Comcast looked at both because they both came to market, not because Comcast was actively seeking such deals.

Roberts also bristles at the perception that any interest in M&A and reaching into new or different segments means there's a lack of confidence in the company's primary businesses.

"The notion that [the pursuit of acquisitions] means you don't love your core business just isn't right," he said, admitting earlier that there's a certain "show-me mentality" with investors. "We'll prove that with our results, I hope." (See Comcast Asks Wall Street: Where Is the Love?)

— Jeff Baumgartner, Senior Editor, Light Reading

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