Comcast Eyes X1 Set-Top Box as OTT Video Antidote

27 Oct, 2015 By: Erik Gruenwedel

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With Dish Network (Sling TV), Charter (Spectrum TV) and Verizon (Go90) launching standalone over-the-top video services in an effort to combat declining pay-TV subscribers, Comcast continues to believe in the set-top box — with a few changes.

Specifically, Comcast’s new X1 set-top box is cloud-based, meaning content is accessed via broadband much the way Netflix, Amazon Prime Instant Video and Hulu Plus are.

Speaking on the Oct. 27 fiscal call, Comcast Cable CEO Neil Smit said the cabler is combating changing consumer behavior by rolling out programs such as Internet Plus, which offers discounted streaming access to content for a limited time. The company said about 30% of IP subscribers eventually upgrade to high-revenue program bundles.

"Comcast on Campus" offers streaming access to students at 26 universities nationwide — primarily in their dorm rooms. NBC Universal’s comedy-based subscription streaming service Seeso was just beta-launched in select markets, while “Watchables” launched this month targeting millennials with semi-professional content from 32 content providers.

“Providing the right introduction to our products allows us to better retain our customers and potentially migrate them to higher-end packages over time,” Smit said.

The CEO said that unlike other pay-TV operators’ shifting embrace of OTT video, Comcast feels the X1 (installed in 25% of Comcast’s footprint) provides a platform from which to deliver more than streamed content.

“There is greater viewership (with X1), there is more VOD consumption, both transactional and [on-demand]. Churn reduction is significant. More DVR usage. So, were investing behind the X1 platform,” Smit said.

Meanwhile, broadband continues to be a silver lining for pay-TV operators. Most multichannel video program distributors are also Internet service providers (ISPs) — the lifeline to OTT video.

Comcast added 320,000 high-speed Internet subscribers, which was up slightly from gains of 315,000 broadband subs during the previous-year period.

Smit said broadband continues to be the leading driver of cable revenue growth, with 73% of broadband subs receiving streaming speeds of 50 megabits-per-second or greater.

Finally, Comcast Cable, along with other pay-TV operators, continues to lose video subscribers. The cabler reported a drop of 48,000 video subscribers in the third quarter (ended Sept. 30), which was a 40% improvement from the previous-year period when it lost 81,000 video subs. Comcast ended the period with 22.2 million subscribers.

The video decline mirrors ongoing industry trends that find increasing numbers of consumers streaming entertainment from the Internet. Indeed, the fiscal quarter saw softness for the first time within the telecommunications sector. AT&T reported a loss of 92,000 U-verse video subscribers and Verizon added 42,000 subs, which was down 63% year-over-year.

Year-to-date, Comcast video subs are down 2.3%, Verizon subscriber growth has cooled 41%, and AT&T is down 66,000 video subs compared with a gain of 591,000 subs through the first nine months last year. 

 

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