How Comcast is driving growth with a winning video on demand strategy

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Earlier this week, John Koblin of The New York Times wrote about the surprising success of ‘This is Us.’ NBC executives have attributed part of the show’s great December ratings to a “Thanksgiving bump”: The two episodes that were broadcast after the holiday had a jump of more than a million viewers, according to Nielsen.”

Even just a few years ago, this scenario – steady week-over-week ratings increases – was unlikely. Networks were hesitant to “stack” episodes or seasons of shows, especially current shows, and service providers were not particularly focused on the potential of on demand. But networks, realizing both the advertising potential and the potential to boost in-season ratings, have since come around and 2016 was certainly a tipping point.

Comcast, which owns NBC, realized much earlier than other MVPDs the importance of on demand, and its commitment to building out a robust Xfinity on Demand content library coupled with investments in hardware and UX for its X1 set top box resulted in something even more surprising than the success of ‘This is Us’: the company added 161,000 video customers in 2016, its first year with net TV subscriber gains since 2006. (‘This is Us’ also continues to top the weekly Xfinity on Demand most-viewed list).

For more on Comcast’s Xfinity on Demand and X1 strategy, we spoke with Steve Meyer, Vice President of Video Strategy and Analysis, Comcast Cable:

Found Remote: Comcast added more than 150,000 subscribers in 2016. How do you think improvements to X1 and Xfinity and Demand have helped contribute to that?

Steve Meyer: A big part of how we’ve grown customers over the past year has been improved retention and X1 has been a key driver. Because of the inherent nature of X1 – the integrated content, the easy and innovative interface, voice search, personalization, industry-leading on demand catalog, etc. – customers are discovering more content and therefore consuming more on our platform and ultimately staying with us longer. As a result, over 80 percent of our X1 customers use Xfinity On Demand each month. They consume – on average - about 21 hours per month.

FR: How has on demand, a feature that has been available for 15 years, continued to evolve, and why is it more important than ever for both networks and advertisers?

Meyer: When Xfinity On Demand first launched, customers used it mostly for pay-per-view movies, kids shows and music videos. About five or so years ago - as networks starting making more TV shows available on demand – we noticed our viewers were gravitating towards it. So we started working more aggressively with our programming partners to bolster the catalog. Now, broadcast and cable networks are now making nearly all of their shows available on demand and that number continues to grow. Also growing is the quality of shows they’re making available – we now have all 100 of Nielsen’s top-rated show on our platform.

It’s been four years since we started talking with networks about stacking the current season and 2016 represented a tipping point. Networks are leaning in. For the 2016-17 TV season, broadcast networks are stacking 61 percent of current season scripted originals, up from 23 percent percent two years ago, and the top cable networks are at 77 percent, up from 53 percent. About half of Nielsen’s top 100 shows are fully stacked.

And with technologies like dynamic ad insertion, both networks and advertisers are realizing the platform’s potential to provide a better and more targeted advertising experience than the traditional linear model.

FR: Why were networks hesitant in the past to both stack and offer full availability of series on demand?

Meyer: When customers subscribe to a TV service, they are paying for the current season of their favorite shows. So we believe they should have access to as much of the current season as possible. We wanted to close this gap so we started banging the drum about stacking and its ability to build new audience for networks. We’ve come a long way in terms of the amount of stacked content we offer and it’s now less about convincing the network this is a good thing, but rather adjusting business models to suit this new way of consumption. But stacking is only part of the equation as the TV landscape continues to evolve.

Today, TV shows are scripted like novels. And just like a novel, you don’t want to start watching or reading halfway through. Audiences are gravitating towards series that allow you to start from the beginning and networks that are making complete series available are gaining views as a result. For example, premium networks, which offer completeness for most of their shows, saw the biggest increase in on demand views in 2016 compared to broadcast and cable networks. There are now there are over 150 series where customers can start from the beginning and with the addition of Netflix on our X1 platform, the number continues to grow.

FR: In 2016, 18- 49 C3 ratings on stacked series were 23 percent higher in Comcast homes compared to non-Comcast homes, and stacked cable series ratings were 32 percent higher. What do you think is it about Xfinity on Demand compared to other on demand services that result in higher viewership?

Meyer: Stacking in and of itself drives ratings up since it allows audience to continue to join a show well after the linear premier. Some portion of that audience gets hooked, catches up and get current with the series. And from that point on they contribute to the core C3 audience. Because we have such high on demand adoption and usage, this type of “binge-viewing with a purpose” effect is more pronounced among our households in the ratings.

Comcast has always gotten behind on demand in a big way and been aggressive in making sure it’s part of the overall Xfinity TV value proposition – much more so than others. Also, the uniqueness of X1 has enabled us to weave on demand content more seamlessly into the TV experience so it’s easier for customers to discover and realize the breadth of content available.

FR: How have viewer habits changed when it comes to on demand?

Meyer: On demand has traditionally been used as a platform for customers to catch-up on a show they might have missed and come back the following week to watch it live. And they might do this with a handful of other shows they’re watching at the same time. This is certainly still happening, more they’re also now using it to discover new shows and watch all the way through. And once they find one they love, they use on demand as the primary platform to get caught up. When they’re looking for their next show, they are more likely to choose a complete series and start from the beginning. Binge-viewing is certainly not a new concept, but with innovations such as bringing Netflix to our X1 platform, we can snap together more past and current seasons to give customers the complete viewing experience they’re looking for.

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