Moving its set-top boxes and DVRs to a cloud-based delivery system positions Comcast to eventually offer a streaming video package with a smaller bundle of networks both inside and outside of its markets.
Comcast's X1 trending shows screenshot
Comcast / Via corporate.comcast.com
Here's something to think about: Comcast, the largest cable operator in the U.S. with around 22 million total subscribers, will soon have more broadband subscribers than video subscribers for the first time ever.
It's a tipping point the industry as a whole reached at the end of the second quarter, and one that Comcast has been anticipating for several years. The company over the last two years has been steadily moving its subscribers to an internet-based delivery system for video via its X1 set-top box and improving the functionality of its DVR to allow for the streaming of live TV to any device in the home and access to recorded shows via streaming or download outside of the home.
But while the upgrades are a nice feature for current subscribers, Comcast isn't making them so teenagers don't have to watch TV in the same room as their parents anymore. The end goal in moving its service and subscribers to a cloud-based system, which you won't hear from Comcast executives while its impending $45.2 billion merger with Time Warner Cable is under the regulatory microscope, is to position Comcast to eventually offer a smaller bundle of broadband and video to consumers inside and — here's the important part — outside of its markets under the Xfinity brand banner in the future. The very near future, like next year even.
"Comcast is fully prepared and technologically capable of launching an over-the-top video service," said BTIG analyst Richard Greenfield.
AP Photo/Susan Walsh
Today's news that Comcast is rolling out its live in-home streaming and cloud-based DVR features to subscribers in the Bay Area, the eighth market in its footprint to receive the upgrade, joining Atlanta, Baltimore, Boston, Chicago, Houston, Philadelphia, and Washington, D.C., is an indirect step in that direction.
Comcast demonstrated some of the new features for BuzzFeed News last week, among them super-fast download speeds, a smart programming guide that listed shows in both a linear fashion and by what was trending on social media, a recommendation engine based on past viewing, and the ability to pick up a show where you left off while switching viewing between devices. These features are delivered via the X1 set-top box, an Xfinity TV app for iPhones and Androids, and a dedicated website.
Comcast Senior Vice President for Video Matt Strauss and other executives will tell you the added features help "maximize the value of what our customers pay us for" and that the focus is on creating a better "package and bundle of services within our footprint."
Indeed, the only drawback to the service is that to get it you have to be a Comcast cable subscriber. For now at least.
Comcast is already experimenting with smaller bundles inside of the markets in which it operates. The company currently offers something called "Internet Plus," which combines in-home wireless service with more than 25 channels, including the broadcast networks and HBO, and Streampix movie service. Outside of the home "Internet Plus" subscribers can use the Xfinity TV Go app to access live and on-demand content that is part of their subscription.
Comcast has also made a big push into universities within its markets with a product called "Xfinity on Campus." This package allows students to stream video to devices over the college's internet service or using a wireless network to log into TV networks's individual apps.
"There are customers who would see value in a slimmer bundle, and we want to start building relationships with them, whether they are millennials or customers in other demographics," Strauss said.
The reason why Comcast wants to "build relationships" with these customers is because they are both the least likely to want an actual cable subscription and are the ones increasingly being targeted by streaming video providers like Netflix, Hulu, Amazon, and Google. But it's not just the insurgent newcomers that are going after Comcast subscribers — it is also long-entrenched incumbents. Satellite television distributor Dish Network has inked deals with ESPN, A+E Networks, Food Network, HGTV, and other channels and plans to launch a cheaper, internet-delivered streaming video package by the end of this year. Sony and Verizon also plan to launch streaming video services between now and the middle of next year, and AT&T's impending purchase of DirecTV will allow those companies to experiment with all kinds of streaming offerings to mobile devices.
"If Dish, Sony, and Verizon all launch over-the-top video services, then Comcast will be forced to launch one of its own," said Greenfield, adding that it could happen as soon as next year. "There is no way they let those guys come into their markets and stand idly by while they go after their subscribers."
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