Comcast’s X1 Bet Pays Off

DonohueWord that Canadian cable MSO Shaw Communications is testing Comcast’s X1 platform left me thinking about something the late Comcast founder Ralph Roberts said in July 2000, not long after Comcast first introduced digital cable.

“Our company is filled with these young guys who have got bushy tails and want to go racing out after a million things, and it looks like a lot of what’s out there is going to work … When you have enough guys thinking about it you’re going to come up with some good products,” Roberts, who passed away on June 18, said in an interview for The Cable Center’s oral history project. (It’s worth watching the entire 58-minute interview, which The Cable Center posted on YouTube last Friday).

Comcast has hired more than 1,000 software engineers in the last decade. Instead of relying on software giants like Microsoft to develop next-generation interactive TV technology, the nation’s largest cable MSO has spent heavily to recruit designers and app developers to transform its cable TV product into a service that can deliver personalized programming and advertising to every screen both inside and outside the home.

Since launching the cloud-based X1 platform in Boston in May 2012, Comcast has pitched other cable MSOs the idea of licensing its “entertainment operating system” for their cable systems. Cox Communications will likely be one of the first U.S. MSOs to use X1. And Shaw’s move shows that we could see the products that Comcast’s teams of engineers have developed deployed internationally.

Over the last two years, we’ve heard Liberty Media chairman John Malone and Charter Communications CEO Tom Rutledge tout the benefits of scale that can result from consolidation.

What Comcast has done with X1 may be the best example of the benefits of scale. By licensing X1 to other cable operators Comcast will be able to increase spending on innovation, which will help it compete with the likes of Verizon, AT&T, and virtual MVPDs backed by major CE and software companies. Cable operators that license X1 could reduce spending, and take advantage of the products Comcast has developed.

Look for Comcast to distribute much more than smarter program guides to other cable operators. When it offered reporters a sneak preview of its new Studio Xfinity retail store in Chicago in May, Comcast showed that it is on the path to selling next-generation set-tops, Wi-Fi gateways and other customer premise equipment through retail stores (see image we shot above).