News this week from Comcast that it will take Xfinity Instant TV on the road and offer it outside of its customer footprint, but inside its platform reach, was digested by analysts and industry watchers in a far too reserved fashion.
This long-awaited move to put OTT video at the heart of its customer acquisition effort follows in the footsteps of European counterparts who have found that such a move is massively effective and disruptive. Comcast is, in effect creating what appears to be a rival to Sling TV and DirecTV Now, but is using it to sell broadband.
So far Stream TV, its 2015 $15 service, was just a really skinny bundle on iOS and Android, mostly the big four local stations plus HBO, PBS, the CW, Univision and Telemundo. But it its heartland Comcast offered its Xfinity TV Go App since November 2013, free to Xfinity subscribers for which there was originally no out of home viewing.
We go back to 2012 when Streampix entered the market and left again in 2014, a reaction to Netflix which failed, although 500,000 customers were signed before it switched it off. Today’s news is more about positioning itself as a proper skinny bundle as defence against DirecTV Now, and also as a stepping stone for first taking Comcast broadband, and later having a set top and taking the content to your TV.
Back in February Comcast launched its successor to the Xfinity TV app bringing full Xfinity X1 functionality, including a Spanish guide, filtering, music channels and Common Sense media ratings to X1 users. That’s 200 live channels and 40,000 on demand assets and a cloud DVR. It also said it was fine to take this out of your home, and clearly this move was a precursor to this recent move.
The new service is called Xfinity Instant TV and will be available in the third quarter to the 50 million homes which Comcast passes. Once again, the price point will begin at $15, but this time it will include all the major sports networks which Comcast has rights for – including Disney’s ESPN- and that will take pricing to around $40 a month, says Reuters.
We suspect that early introductions will include up to 6 months free when you take Comcast broadband, for new customers and see this as a broadband defence against AT&T and others bundling broadband with OTT video services.
This move changes the market dynamics forever. Every MVPD must now follow, or at least begin preparing its network for this kind of move.
Comcast has always had extensive rights to the content it holds, and going all the way aback to nPVR and the legal argument which went right up to the Supreme Court through Cablevision, was no obstacle for Comcast, which simply negotiated online VoD rights, so that it could get around the law.
Recent news reports suggest that Comcast quietly added a number of national OTT rights which it did not have over the past few weeks. FierceCable suggested that what Comcast actually did was enforce most favoured nation clauses, a trick which has been widely used in the past, to claim rights to these channels online, rather than actually pay anything further for the content.
The final step in the chain may never happen in the US – providing OTT video through someone else’s broadband line – but that will be effectively here if Comcast offers these new customers out of home rights. It may have to renegotiate rights to achieve this, since then it can go after rival broadband customers without making them give up their broadband or even sit within the Comcast physical footprint. At that point there will be a complete divorce between physical network capability and content, and while we appear to be heading for that, it may not be an outcome that AT&T, Comcast and others are prepared for.
If the FCC abandons Title II provisions without replacing its strong net neutrality elements, Comcast customers would be unable to have zero-rated Comcast content, on an AT&T line, and would have to pay their broadband provider for all the data they use. But that’s another story.
Comcast has been claiming that its TV customers have been rising, while bundling in Stream TV and University Campus OTT additions, into the numbers. Once this service is up and running it will really be able to accelerate the TV customer numbers, but with packages that for the most part are not anything like as profitable as proper cable.