Comcast says it isn’t interested in launching its own virtual MVPD service, while it has been quietly acquiring the rights from broadcasters to do so. If it did launch a Sling TV competitor it would likely do very well.
Matt Strauss, EVP for Video Services at Comcast, says the company isn’t interested in making the leap to national over-the-top operator. At least, not yet.
“When you really try to evaluate the business model, we have not seen one that really gives us confidence that this is a real priority for us.”
Who can blame him, with 2016 seeing Comcast show its first meaningful growth in video service subscribers in nearly a decade. But that could change fast. Digital TV Research says the number of North American homes without pay TV will climb from 20.7 million today to 41.6 million in 2022. Pay TV penetration is forecast to drop from a high of 87% to 75% in 2022.
A market move like that could be enough to nudge Comcast into becoming a virtual MVPD* sooner rather than later. Here are 3 reasons the company is likely to be successful if it chose to do it.
Comcast has been collaborating with content providers to help deliver their content for decades. These relationships have allowed the company to get so-called “most-favored-nation” clauses in content license deals, according to Bloomberg. Most-favored-nation clauses say if another operator gets a certain set of rights to the content and Comcast doesn’t have those right, it gets them at the same price as the rival. For example, under such arrangements Comcast would be able to license ESPN for Nationwide streaming with the same rights and pricing as obtained by Sling TV.
This is a powerful position to be in. It means that Comcast can offer the same packages as Sling TV, DirecTV Now, and PlayStation Vue and pay no more than its rivals for the content.
Ownership of NBCU could allow Comcast to do things other networks simply can’t. We saw a hint of this with the Olympics coverage last year. Comcast integrated all the live web streams into the X1 experience giving an unprecedented summer games experience to its customers. The company could bring the same approach to the virtual MVPD environment.
My podcast partner, Will Richmond of VideoNuze, thinks there is another opportunity for Comcast to take a radically new path. The Olympics is a rare sporting event. It attracts viewers across gender, race, and interest lines. Non-sports fans, who may have opted for an vMVPD service to avoid paying for sports, may well be interested in the Olympics. Comcast could offer a special 3 weeks Olympics subscription through its vMVPD service. This would give access to all the broadcast coverage, and integrate in all the live the streams. How much would you pay for this?
Xfinity TV technology
The Xfinity TV platform was built to deliver live linear and on-demand in a multiscreen IP environment. This flexible platform has allowed Comcast to launch services on the X1 set-top box, on a private IP network for the Stream service, and now to a Roku set-top box.
It can also bring some distinct advantages over the competition. Comcast is already migrating its X1 subscribers to a network DVR. DirecTV Now does not currently offer DVR service, and Sling TV’s is still in beta. Only PS Vue provides full DVR capabilities, though recordings are not kept for more than 30 days.
What’s more the platform is tried and tested. It could give Comcast a big advantage in the market, at least in the short term.
There are other advantages that Comcast could bring to the vMVPD space to further differentiate itself from competitors. The company already has a successful movie store as part of its cable offering. It could be added to the vMVPD service. It is also using direct ad insertion to bring targeted ads to its on-demand library. The same technique would work well online.
Why it matters
Comcast says it’s not interested in competing with virtual MVPDs like Sling TV and DirecTV Now.
However, it has been acquiring the content rights to do so.
It’s market leverage, ownership of NBCU, and Xfinity TV technology could give it a big advantage in the vMVPD market.
Whichever way you cut it, Comcast would make a formidable competitor in the vMVPD space.
*nScreenMedia now uses virtual MVPDs as the title for services like Sling TV, DirecTV NOW, and PS Vue. These services are no longer small enough enough to be considered truly “skinny bundles.”