Comcast Eyes Smart TVs to Expand Streaming Opportunity and Stay Competitive Across Markets

Comcast, in a recent investor event, mentioned that the company is exploring the possibility of licensing its X1 platform to smart TV manufacturers. X1 is the platform used in Comcast’s IP-based set-top boxes, which was first deployed a few years ago. The X1 operating system integrates voice-assisted remote control and streaming apps such as Netflix, Hulu, and others. The X1 platform is currently licensed to other cable companies such as Cox in the United States and Rogers in Canada to develop their own IP-based set-top boxes. Comcast did not yet reveal which TV manufacturers it has plans to partner with.

Comcast, the largest cable operator in the United States, has more than 20 million cable TV subscribers. Stiff competition from streaming services led Comcast to lose more than 1 million TV subscribers in the last year. In order to compete with streaming services, Comcast introduced the home entertainment platform X1, which supports live streaming and cloud DVR. Comcast is also providing Flex set-top boxes, which support free and premium subscription video streaming services to its broadband customers since 2019. Flex has become a fast-growing product offered by Comcast, reaching more than 2 million units deployed since it was introduced.

In the broadband segment, Comcast continues to maintain healthy subscriber growth. It added 1.6 million broadband customers over the past year to reach a 27 million subscriber base. According to Comcast’s executive, the company is on track to exceed the subscriber net addition that it achieved last year. Comcast rolled out the ad-supported streaming service Peacock to its TV and broadband customers across the United States in April 2020. Peacock has achieved 15 million sign-ups since it was launched. Comcast’s interest in licensing the X1 platform to smart TV manufacturers is potentially the next step to expanding its streaming platform reach to more users.

Comcast, through its subsidiary Sky Q, already has a strong presence in Europe. Although the subscriber base of its European segment Sky Q has been stable over the past few quarters, the pandemic has resulted in customer loss mainly driven by disruption of sporting events. In addition, many pay TV operators generally foresee headwinds ahead due to pressure imposed by streaming services as well as the challenging post-pandemic economic conditions. Given the changing pay TV trends and economic situation, it makes perfect sense for Comcast to expand its X1 streaming platform to more devices and a wider geographical area.

Furthermore, acquisition of the ad-supported video platform Xumo early this year can also help Comcast improve its video advertising business. At present, Comcast’s ad-supported platform Peacock is not available on devices running Roku or Amazon operating systems. If the X1 platform is extended to smart TVs, additional revenue can be generated through licensing fees, a wider streaming service user base, and a broader advertising reach. At present, platforms such as Roku, Amazon Fire TV, and Android TV have strong partnerships with smart TV manufacturers. Roku software is used in one in every three TV sets sold in the United States at present. The Amazon Fire TV platform is widely deployed in smart TVs across Europe and United States. Many smart TVs have adopted Google’s Android TV platform. Despite the presence of existing platforms in the smart TV market, increasing smart TV adoption across different markets and Comcast’s strength in the pay TV business create opportunity.

Licensing X1 on smart TVs will make the device and platform landscape that streaming services are supporting more fragmented. As the streaming market gets more and more crowded, consumers’ expectation for Quality of Experience (QoE) becomes high regardless of the device or platform where they are receiving the service. Vendors providing streaming solutions will need to ensure that streaming services work well across different platforms. Cross-platform app developments supporting fast time-to-market are essential in this competitive market. In addition, solutions that help service providers achieve maximum ad revenue across different platforms are required. Since live streaming is becoming an important feature, integrated advertising solutions for linear, VoD, and OTT are also becoming crucial. Solutions supporting addressable advertising are essential for inserting ads into both linear and streaming, ensuring that the right ads are seen by the right consumer at the right time. As large media companies are increasingly moving towards streaming, investment in premium content alone won’t be enough for a successful streaming service. Service providers need investment in technology and solutions to achieve maximum return on investment while offering optimum QoE to consumers.