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9 January 2020

Xumo could buy Comcast time to make Peacock fly

Rumors that Comcast has earmarked ad-supported streaming platform Xumo as an acquisition target have provoked reactionary projections for 2020 including AVoD domination and YouTube’s downfall. Faultline’s own prediction, deal or no deal, is that Comcast will crush the ad tech market.

Comcast’s apparent approach of Xumo was first floated just before the turn of the year by the Wall Street Journal, which – naturally – has been interpreted as an integration option for NBCUniversal’s forthcoming streaming service Peacock. But there is much more to the prospective deal than that.

The Xumo ad-supported app is already available on Xfinity set tops, with Xumo essentially serving as an MVPD with technology described as laying the “virtual plumbing” for broadcasters to deliver content via internet-connected smart TVs and set tops – providing a platform for switching from FTA to IP.

If Peacock, which is expected to roll out on a freemium model basis, is Comcast’s primary financial cushion for the freefalling pay TV business and an eventual successor, then Xumo would mark the deployment of an emergency parachute. With cable TV subscribers cancelling in droves, Xumo would buy Comcast time to build Peacock into a reputable money-making business, providing some stickiness through Xumo’s various content partners. But, if we have learned anything from the last few years, it is that making money from OTT video platforms – both SVoD and AVoD – is infinitely harder than launching one.

Jointly owned by Panasonic and media conglomerate Meredith, Xumo has achieved some astonishing growth figures. When Faultline spoke to Xumo back at CES 2017, CEO Colin Petrie-Norris told us the company was aiming to reach somewhere between 14 million and 25 million homes by the end of 2017 – going on to reach 30 million homes by August 2018 and growing further to around 35 million today.

Over at Barclays bank, the view from all this noise is that YouTube could be in trouble. Barclays analyst Kannan Venkateshwar reckons the rise of the first reputable YouTube rival is coming in 2020, driven by the growth of premium content on ad-supported offerings. We would add that social media platforms, as well as live streaming services such as Twitch, are already gnawing away gradually at YouTube’s dominance.

The California-based firm has also built its own content recommendations engine, claiming to have over 300 million users every month, providing a non-profile based system taking into account metrics such as time of day, at a cost-per-completion model. Alternatively, customers can choose to plug an alternative recommendations system into Xumo’s platform.

While smart TVs remain the core focus market for Xumo, it recently rolled out iOS and Android apps, as well as providing channels on Roku devices and more recently has infiltrated the cable TV ecosystem – following up the Comcast deal with an integration at TiVo in October. Xumo has surfed the wave of vMVPD launches as broadcasters have looked to secure new advertising business.

Pluto TV, owned by ViacomCBS, is in a similar position to Xumo, boasting around 20 million monthly active users today and offering some 100 ad-supported channels.

After CES, NBCU’s upcoming event is the second most anticipated event of this month, when further details on Peacock will be revealed. Reports from a few weeks ago said NBCU had settled on a $10 monthly price point for the ad-free tier, alongside a $4.99 a month tier with fewer ads, although this is subject to change before the April 2020 launch.

While Xumo would offer a decent addition to the Comcast business, we can’t help but feel its money would be best invested in the back-office ad tech market. Take TVSquared for example, an Edinburgh-based video data analytics firm that has worked on the Instant Impact project for Comcast and more recently was promoted to provide attribution data to NBCU, including all 42 regional sports networks.

Faultline has noted on a couple of occasions now that Comcast should just go ahead and acquire TVSquared, and it just so happens we have an interview penciled in with the vendor itself next week, so keep your eyes peeled, readers.