EXCLUSIVE: As the coronavirus pandemic gradually releases its grip, Comcast seems to have managed through the worst of it, thanks in large part to its broadband operations.
Last week, the company reported better-than-expected earnings. Despite shedding nearly half a million pay-TV customers and reporting some softness at NBCUniversal, the company handily beat Wall Street forecasts by gaining 461,000 broadband customers.
And what do those broadband customers want most during these times? Video, naturally. Video accounted for 71% of all downstream internet traffic on Comcast’s network in 2020, the company says, a 70% increase over 2019 levels. Across the Xfinity X1 pay-TV platform and the Flex broadband bundle, OTT viewing was up 73%. Adding in the Stream app for viewing across screens and customers overall watched about three more hours of video a week than they did before the pandemic.
“That’s huge,” said Rebecca Heap, SVP of video and entertainment for Xfinity, in an interview with Deadline. And viewing is “still staying healthy across the board” after an initial spike in the second quarter of 2020 amid lockdowns, she added. “A lot of that clearly is due to the increasing aggregation of over-the-top services on our platform.”
Comcast has long been aggressive about integrating streaming services into X1 and Flex, ensuring that customers can toggle between free offerings and subscription fare. It has woven in HBO Max, Disney+, Discovery+, Crackle and NBCUniversal’s Peacock into the interface over the past year. In all, Heap said, there are now about 250 app and content integrations across Flex and X1.
Flex has grown steadily and now has more than 3 million households using its video set-top box, which comes at no extra charge for Comcast broadband customers. X1 is several times larger, and comprises more than two-thirds of Comcast’s overall cable TV footprint, still the nation’s largest. On X1, 78% of customers used OTT apps on the platform each month, up from 68% in 2019. Of that group, nearly 80% are using two or more apps monthly.
In addition to gauging activity on its platforms, Comcast has also sought to roll out new offerings in response to customer needs and interests, Heap said. Flex has added a live channel guide, pointing viewers to linear channels from ad-supported providers. It is now the second-most-visited destination on Flex after the home screen, surfacing programming available on company-owned outlets Peacock and Xumo as well as third-party services like Pluto and Tubi. Free, ad-supported viewing now accounts for about half of all streaming on Flex.
The WWE, whose stand-alone streaming network was absorbed by Peacock in a high-profile deal earlier this year, is now a major destination on Flex. Editorial curators created several rows of custom offerings for wrestling fans, many of whom are new to Peacock. As of the end of the first quarter on March 31, Peacock had 42 million sign-ups, but the WWE Network app did not vanish until April 4, so the transaction is expected to boost the second-quarter numbers.
On Comcast’s earnings call last week, execs said about one-third of sign-ups are considered “monthly active accounts” and the service’s 1 billion hours of viewing is twice the internal forecast. Viewers on average are also watching about 20% more Peacock programming than NBC fare, leading to higher advertising rates due to the more precise targeting available in streaming.
While algorithms and AI are useful in connecting viewers with what they want to watch, Heap said the editorial layer has been essential to Xfinity’s growth. Machine learning can generally identify what is being viewed heavily and recommend it to more viewers. Editors, on the other hand, “know what hasn’t launched yet but what will create excitement,” she said. A recent top 20 all-time sitcom list created by an Xfinity editor linked viewers to a number of major services and reinforced the company’s thesis that it wants to guide viewers to what they want to see regardless of who is distributing it. Traditional industry strategy favors a more insular and synergistic approach, but that was more feasible in a three-network era or even when a handful of media companies and cable operators controlled 90% of the market. Then along came Netflix.
A major corporate event is approaching in July that has historically bolstered view time on Xfinity: the year-overdue Olympic Games in Tokyo. Comcast and NBCU will have two Olympics in seven months, with the Winter Games in Beijing set for early in 2022. On the X1 interface, the Olympics will be the “hero” — a trade term for a marquee visual element on a menu screen. Customization and personalization will enable viewers to be able to readily track their favorite sports. Peacock will have three linear channels and three daily shows devoted to the Games.
With increasing distance from the most intense period of the pandemic, Heap recalled that viewing trends early on favored comfort viewing and news. Live and educational fare, including a beefed up compliment of Black stories, do continue to be steady draws, she said.
It’s still a bit early to call out trends that are specific to 2021, but Heap sees strong indications that viewers prefer free and lean-back offerings. “It probably goes a little bit to the subscription fatigue” of the streaming era, she reasoned.
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