Market Insight

Comcast takes app-first approach for UHD launch

January 20, 2015

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Comcast takes app-first approach for UHD launch

Comcast has become the second US pay TV operator to launch a UHD service, following DirecTV’s launch in November 2014. Comcast’s UHD offering is available to lower-resolution subscribers of that content at no extra charge, but currently only accessible on 2014 Samsung UHD TV models, through the “Xfinity in UHD” app. Comcast’s initial UHD content offer is comprised of TV series from its media subsidiaries, NBCUniversal and USA Networks. Two TV series will be made available in UHD at launch, with a full catalogue to be deployed in 2015, as well as a separate UHD set-top box (STB).

Our Analysis

Comcast’s UHD strategy has similarities to DirecTV’s approach in that both operators have launched UHD services without new STBs, delivering content on-demand using OTT and not linear broadcast. In doing so, they benefit from minimising the cost of launching UHD services and faster time to market, but suffer from limited scalability. DirecTV’s UHD service uses RVU remote user interface technology that resides in its Genie multimedia home gateway and requires RVU-compliant UHD TVs to render the interface and decode the content. The scale offered by this approach is ultimately limited by how many TV brands can be persuaded to integrate RVU into their UHD TVs. Comcast’s app-based approach is similarly challenged in achieving scale, because it requires apps to be developed for each brand of UHD TV. The reliance of both strategies on third-party hardware and software also means maintaining long term support could prove difficult.

The current UHD opportunity for both operators has been limited to just Samsung UHD TVs under these strategies. Comcast’s intention to deploy a UHD STB can be seen as a desire to improve UHD scalability, guarantee quality of service (QoS) and transition its UHD service to a premium offering. Fundamentally, Comcast’s app approach could be seen as an interim solution to challenge DirecTV and OTT providers of UHD content such as Netflix, Amazon Instant and M-Go. Comcast may similarly carry some conviction that a box deployment in the nascent phase of UHD brings no particular competitive advantage until UHD TV households and UHD content creation has increased.

Comcast has not yet disclosed what type of UHD STB it will deploy, but a thin client STB would be most likely. Firstly, a UHD thin client will enable Comcast to offer UHD without disrupting the roll-out of its XG1 multimedia home gateway (MHG), and may encourage XG1 uptake because the UHD client won’t function without being connected to the MHG. Secondly, a UHD version of the XG1 would be significantly more expensive than a thin client and a riskier investment given that consumers are yet to demonstrate a clear appetite for UHD. Finally, as Comcast has experimented with headless MHGs (XG5) in the past, a UHD thin client will have no implications on Comcast’s future MHG strategy. This is because of its compatibility with both headed and headless MHGs.

Although, US pay TV operators have leaned towards an app/software-based approach to deploying UHD so far, they are likely to transition to a UHD STBs to achieve scale. An app-based approach cannot provide operators the scalability and QoS that they need. UHD STBs shipments will reach 12.6m in 2018 from a modest 19k in 201 4, with the US market accounting for around 57% of 2018 UHD STB shipments.


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