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NBCU’s Burke: ‘Healthy Degree of Skepticism’ That OTT TV Will Draw Subs by the Millions

Though the market is being flooded with new virtual MVPDs that are targeting the 20 million U.S. homes that don’t  subscribe to a pay TV service from a traditional provider, it’s unlikely that these new entrants will drive massive volumes, at least in the near term, NBCUniversal’s top exec said.

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“The real promise of some of these new over-the-top entrants is that they would deliver incremental subscribers, which obviously would be good for the content side of the company,” NBCU CEO Steve Burke said Wednesday (Oct. 26) on Comcast’s Q3 earnings call. “I think we all have a healthy degree of skepticism that these new over-the-top entrants are going to create millions and millions and millions of subscribers anytime soon." 

While new entrants are taking a fractional share from existing MVPDs, most consumers, Burke said, still find value in their cable, telco or satellite TV service and aren’t looking to change.  

“I think there could be a modest positive for NBCUniversal,” he said with respect to the new OTT entrants.  

Comcast, meanwhile, has repeatedly argued that the economics of an OTT-TV service don’t add up.

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Instead, Comcast has been focused on an in-market strategy with its cloud-powered X1 platform, which is testing an integration of Netflix ahead of a commercial rollout that will kick off later this year.  Notably, Comcast will be “upselling Netflix” as it would with premium networks such as HBO or Showtime, company chairman and CEO Brian Roberts said.

Neil Smit, Comcast Cable’s president and CEO, said the MSO will continue to target and segment how that platform is used, citing examples such as Xfinity On Campus (for college students), X1 double-play bundles, as well as Stream, a mobile-focused, slimmed-down pay TV product targeted to cord-cutters that is being tested in a few markets.

“We will continue to innovate on X1,” Smit said. “I think there's going to be more flavors and more competition, but we'll compete aggressively." 

Comcast secured about 948,000 net adds to X1 (new and existing customers) in Q3, and ended the period with about 45% of its video sub base on the platform, which has been driving higher customer satisfaction, DVR activations, home outlets, and twice the pay-per-view spend of non-X1 subs.

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Smit also noted that 50% of Comcast video subs are using TV Everywhere, up from 30% last year. Those customers are also averaging 10 hours per month of TVE viewing, he added, noting that the platform now supports about 130 live streaming channels and more than 40,000 VOD selections.

As for in-home video, Comcast is pushing toward an all-IP migration over the next couple of years. “We have the product in the lab and it’s working well.”

And while customers might not care if video is entering the home as IP, the more important piece is the quality of the service and how it can improve the “onboarding” experience, Roberts said.

On that, Roberts pointed to the Xi5, Comcast’s first set-top that supports video-over-WiFi, meaning a traditional wired cable outlet is not required.

“The onboarding of that box is so different than any box we've ever had,” Roberts said, adding that the MSO is pursuing a connection/installation goal of two minutes “with a few simple keystrokes.”

The Xi5 is also the first Comcast box to support High Dynamic Range (HDR). The Xi6, a box that will be wireless and support 4K and HDR, is also in the works.

Comcast still hasn’t revealed a new sub number of Xfinity Home, its smart home/security product. It announced that it pushed past the 500,000 sub mark about a year and a half ago, and “it’s grown significantly from there,” Smit said.

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He said 55% of Xfinity Home subs are new to Comcast, and that 60% of Xfinity Home customers get a quad play (video, high-speed Internet, phone and home security/automation). “It’s a very sticky product,” Smit said.

Comcast added 330,000 high-speed Internet subs in Q3, extending that total to 24.32 million.

Smit said there’s about 6 million DSL subs in Comcast’s footprint. “We see plenty of room for growth.”