Is Comcast ready to let OTT pass? Hardly, it’s waiting for the right moment

By Jim O'Neill on Jul 27 2016 at 12:30 PM
Is Comcast ready to let OTT pass? Hardly, it’s waiting for the right moment

Despite adding 220,000 broadband customers, seeing huge success with its next-gen, cloud-based video platform, X1, and the continued erosion of its traditional pay-TV audience -- down another 4,000 this quarter – Comcast remains reluctant to commit to an OTT strategy that would allow it to pivot to become a virtual MVPD (VMVPD). But, Chairman and CEO Brian Roberts, in a Q2 earnings call today, didn’t rule the move out.

“We just fundamentally believe, for now, that our in-market footprint strategy is where we add the most value to consumers,” Roberts said. “OTT economics are unproven to us,” he added. “It’s not clear that that’s the right strategy for us.”

Nonetheless, Comcast plans to take an active role in OTT expansion, making sure, for example, it’s in major OTT plays.

“I think the key (to OTT) is going to be making sure that we're in every bundle, and I think we're going to be,” said Steve Burke, CEO of NBCUniversal. “We have more channels and more eyeballs than anyone else and we're pretty much essential to those bundles. And then as they go out, making sure that they're incremental, that they're not cannibalistic, wholly cannibalistic. I believe the vast majority of OTT subscribers will be incremental. We'll be going after people who currently are not part of the ecosystem and therefore will be additive to NBCUniversal and all of Comcast NBCUniversal as well.

Although Comcast is by and large eschewing a major OTT push – at the moment – other major players in the ecosystem plan to be far more aggressive. Dish’s Sling TV should top 1 million users this year for its VMVPD and ATT, now that it’s acquired DirecTV, plans to roll out DirecTV Now and other OTT offerings before the end of the year. Sony, meanwhile, is just starting to see its VMVPD, PlayStation Vue, gain traction in the market now that it’s available on devices other than PlayStation 3 and 4.

Content owners, too, have begun to take a significant more open stance on direct-to-consumer plays as HBO, Showtime, Starz and other high-profile cable networks have seen growing success in SVOD plays.

And, with the NFL gifting Twitter 10 of its NFL Thursday Night Football games for just $10 million, it’s clear that sports, too, sees the value of turning toward OTT in both SVOD and AVOD forms, especially on the mobile side where so many Millennials spend their time.

And, in addition to its ownership stake in Hulu, Comcast also is in the process of bringing Netflix to its X1 boxes, a move Comcast Cable President and CEO Neil Smit saw as an opportunity to put customer service – and stickiness – first.

“What it really came down to was, what’s best for the customer,” Smit said. It also positions Comcast to leverage its X1 platform, and make a bigger push later with its own package of streaming services on X1.

“The X1 platform gives us the opportunity to be an aggregator of aggregators,” Smit said.

So VMVPD? Aggregator of aggregators?

A rose by any other name…

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

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