Comcast CEO Prepares His Netflix Killer for an Olympics Showcase

  • Roberts calls NBC’s Rio games ‘our laboratory’ for innovation
  • X1 emerges as ‘Mercedes’ of TV instead of economy car: analyst

At the Olympics in Rio de Janeiro this year, NBC plans to broadcast every event live, either on TV or online -- an explosion of programming that’s the equivalent of tuning in 24 hours a day for 250 days. It’s far more than even die-hard sports fans can watch.

This is exactly the scenario Brian Roberts has been waiting for. The chief executive officer of Comcast Corp., NBC’s corporate parent, plans to use the Olympic games to harness the full power of a tool his company has been developing for cable customers, one that he expects will become such an integral part of their lives that they’ll never want to give up their subscriptions.

Brian Roberts

Source: Comcast Corp.

Comcast’s solution is its technology called X1, a black box with a voice-controlled remote the company envisions rivaling digital assistants from Apple Inc. or Inc. During the Olympics, Comcast subscribers will use it to search by event, athlete or country, get alerts when an American is close to winning gold, and navigate by speaking into the remote. The idea is to make it easy to find what you want to watch on TV or online as the wall between the two gets washed away in the expanding ocean of video content.

X1 lies at the heart of Comcast’s strategy to keep its 22.4 million cable subscribers from cutting the cord for online alternatives like Netflix and Hulu. For Comcast customers, “the Olympics will be individualized, personalized and on every device,” Roberts, 56, said in an interview from his company’s headquarters in downtown Philadelphia. “This is the future of television.”

Five years ago, Comcast paid $4.4 billion to win the Olympics broadcast rights, outbidding Walt Disney Co. and 21st Century Fox Inc., then agreed to pay an additional $7.75 billion in 2014 to air the games through 2032. Making it easier to find events on X1 could boost ratings for NBC, which has generated more than $1 billion in advertising this year from brands eager to reach live audiences for 17 days. The Olympics are “a coming-together moment” for both parts of Comcast, Roberts said.

“Once NBC secured the Olympics rights, we thought ‘What could the rest of the company do to innovate?” Roberts said. The Olympics “is our laboratory.”

‘Mercedes’ of TV

As Roberts spoke, a new laboratory was being erected outside his window, a symbol of the company’s growing tech ambitions. Comcast is building a skyscraper next to its headquarters that will be the largest building in Philadelphia when it opens in 2018. The 59-story tower, designed by the same architect behind Apple’s new campus, will serve as an incubator for startups and the workspace for thousands of Comcast’s techies.

The Comcast X1 viewing screen.

Source: Comcast Corp.

“It’s going to be the coolest building on the East Coast,” Roberts said. “It will offer a real alternative for engineers and designers who are looking for jobs and want to help lead the technology revolution that’s taking place."

Roberts is working to expand the empire he’s created out of the cable giant built by his father Ralph, who died last year at 95. The son, who has been CEO since 2002, acquired NBCUniversal and DreamWorks Animation SKG Inc. and took a run, blocked by regulators, at Time Warner Cable Inc. Comcast stock has produced annualized total returns of about 22 percent a year for the past five years, outperforming other entertainment giants and surpassed only by Charter Communications Inc. among pay-TV providers.

X1 Teams

Comcast has more than 1,000 employees working on X1 in Denver, Washington, Silicon Valley and Philadelphia. Every three months, they take a week off from regular tasks to work on projects that could become new products.

One of those ideas grew into a feature that lets subscribers record anytime someone says anything on TV, according to Tony Werner, Comcast’s president of technology and product. An investor in Alibaba Group Holding Ltd., for instance, could record all mentions of the company on the news.

“For the first time since 1994, you can unequivocally say that cable has the best video offering in the marketplace -- better than satellite and telco,” said Craig Moffett, an analyst at MoffettNathanson. “That’s in large measure to X1.”

Comcast’s video product doesn’t come cheap. Last year the company got on average $82 a month from every video customer. Comcast also charges a one-time $19 upgrade fee for X1 in some markets. Meanwhile, a growing number of companies are offering less expensive alternatives to cable, from $10-a-month Netflix to Dish Network Corp.’s Sling TV, which offers about 20 channels for $20 a month.

“There is a risk that Comcast is positioning X1 as a Mercedes at a time when more of the market is looking at an economy car,” Moffett said.

Glimpse of the Future

Comcast is betting customers will keep paying for cable if they can get more programming and have a simple way to find it. So far, that bet is paying off. In April, as investors worried about the impact of “cord-cutting,” Comcast added 53,000 video customers -- its biggest first-quarter increase in video subscribers in nine years.

Comcast is installing 40,000 X1 boxes a day and expects about half its video customers to have the technology when the Olympics begin on Aug. 5. The company is also licensing X1 to other cable companies, including Atlanta-based Cox Communications Inc. and Canada’s Shaw Communications Inc.

Comcast also has big plans for its voice-activated remote. Executives compare the device to Amazon’s voice-controlled speaker, Echo. 

Roberts has spent time with the creators of Siri, Apple’s virtual assistant, to better understand the potential of digital helpers. Comcast’s remote understands more than 180 million commands -- like “Show me free kids’ movies I haven’t seen” -- and is in the hands of 8 million customers. While most Comcast subscribers so far use the device to try to order pizza, Comcast wants to work with other companies to do “more and more magical things” with the remote, Werner said.

As more household appliances, from washing machines to alarm systems to thermostats, are connected to the web, Comcast wants customers to manage all of it through their TV screens.

Comcast also plans to add video from Periscope and Facebook Live, so you can, for example, watch live concerts filmed by your friends on their phones. Web video has become so popular that the nation’s largest cable company can no longer ignore it. Roberts cited a recent BuzzFeed video on Facebook Live, in which more than 800,000 viewers watched rubber bands be placed around a watermelon until it exploded.

“That’s a glimpse of the future, when anybody with a phone is broadcasting,” Roberts said. “That is this new world. You have to reset your definition.”

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