UPDATED 12:03 EST / NOVEMBER 11 2019

smalley EMERGING TECH

Viewers speak, Comcast listens and cable TV rides its own wave of digital transformation

Seventy years after the first television remote control device was created, it has now become a conversational friend.

When Comcast Corp. introduced a voice-activated remote called the XR11 in 2015, the intent was to provide TV viewers a way to more easily find their favorite shows. The nation’s largest cable TV provider soon found that users liked the new feature, and the platform has rapidly expanded since.

“We’re seeing a billion voice commands happening per month,” said Preston Smalley (pictured), vice president of product management at Comcast. “People are really leaning into it. It’s just become a part of their life.”

Smalley spoke with Jeff Frick, host of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, during the Comcast CX Innovation Day event at the Comcast Silicon Valley Innovation Center in Sunnyvale, California. They discussed how voice interface has been fueled by the growth of streaming services, partnerships with other well-known media providers, the launch of content solutions tailored to broadband-only subscribers, a rise of connected devices in the home and pressure on cable providers to keep pace with demands on bandwidth (see the full interview with transcript here). (* Disclosure below.)

This week, theCUBE features Preston Smalley as its Guest of the Week.

Move to internet service delivery

A billion monthly voice commands may seem surprisingly large, but it’s symbolic of a bigger shift taking place within Comcast and the cable television business in general. The fact is that cable TV only comprises a fifth of Comcast’s global revenue now. The real money is in residential broadband and provision of internet services, a trend known in the TV industry as “over-the-top,” bypassing cable and satellite broadcast platforms entirely.

At the forefront of Comcast’s changing landscape is the rise of streaming services. Households have become much more dependent on the router box than the cable TV device, and that has pushed Comcast to tailor new products and services to address this need. And the data generated by Comcast customers’ voice commands has helped show the way.

“It’s everything from the simple, saying ‘NBC’ into the remote, to the more complicated things like ‘Notre Dame football’ or ‘what’s my WiFi password?,’” Smalley explained. “We’re now at a stage where that covers the basics, but we’re trying to understand how to both increase the breadth and depth of the kinds of commands that you’ll do through the voice remote. It’s being able to search not just the content that we bring, but things like Netflix or Amazon Prime or, soon, Hulu.”

Consumer interest in streaming services has manifested itself in a number of different ways. Although the media company supports over 150 apps on its X1 platform as third-party streaming, according to Smalley, Comcast can identify other opportunities based on verbal requests generated through the TV remote.

An example of this can be found with Netflix Inc., the popular content streaming platform. Even though Netflix has a high rate of penetration in the U.S. market, Comcast has been able to identify and bring in a number of new subscribers.

“They’re trying to reach what they call the ‘Netflix Nevers,’ people who maybe had never gotten Netflix prior, so we’re helping them with that,” Smalley said. “We’re surprised how many people are still signing up new as a Netflix subscriber in our service. Just by making it easy and one click away we found that people are opting to do that.”

Cord-cutting challenge

Comcast is highly motivated to partner with Netflix and encourage user engagement with third-party apps because the cable TV industry is being impacted by Millennials with scissors. Cord-cutting, the severing of cable TV services in favor of internet-generated media streaming platforms, has been putting a dent in revenue.

For the second quarter of 2019, Comcast reported a loss of 224,000 Xfinity TV subscribers. A research study by eMarketer documented that 4 million households per year are dropping cable TV subscriptions, based primarily on high costs and bundles of TV channels that customers largely ignore.

To address this issue, Comcast recently launched Xfinity Flex, a new streaming solution for customers who only subscribe to broadband connections.

“It’s a streaming device which should be comfortable for an internet-only subscriber that they hook up to their TV,” Smalley said. “It’s 4K, HDR, wireless, and through that device they’re able to aggregate all of that streaming content in one place. It’s app content that they may already have, or it’s ad-supported internet content, or maybe they want to buy some more content from us.”

Broadband for multiple devices

As consumer tastes have gravitated away from viewing what cable TV delivers to preferred streaming services, Comcast has also found itself at the center of an ecosystem created by the internet of things. Televisions aren’t the only internet-connected devices in the home. Now there are online light bulbs, thermostats, kitchen appliances, and even doorbells.

This dependence on connected devices has turned the 56-year-old cable company into a key provider of residential broadband and internet services.

“It’s really been a watershed moment for the company,” Smalley noted. “We know that for power users, we’re seeing 20 connected devices on the home network and, in my house, I’m up to 50.”

The growth of IoT devices in the home and cord-cutting has placed a premium on bandwidth. Streaming ultra-high-definition movies and TV shows in 4K resolution is twice the bandwidth required by plain old HD, based on research in a white paper prepared by Cisco Systems Inc.

In response, Comcast has been raising broadband speeds in high-traffic areas of the country, including the densely populated Northeast corridor where it boosted download service in 14 states last month. The company is also anticipating the deployment of 5G wireless connectivity and a time when it will need a virtualized “10G network,” which will require a whole new way of processing and electronics management out to the edge.

“In the last 18 years, Comcast has increased bandwidth 17 times,” Smalley said. “We just keep increasing that because the demand is there.”

Smalley did not start his tech career at Comcast. After positions at Microsoft Corp. and eBay Inc., he became the general manager at Plaxo, which had been acquired by Comcast in 2008, and he led a project to bring personal assistant technology to market.

As Smalley described in a recent blog post, the result was “crickets.” By 2017, Comcast pulled the plug on Plaxo and Smalley has taken the lessons learned to propel his company’s successful pivot to the world of streaming services.

“We’re trying to meet customers where they’re at and build products around those needs,” Smalley noted.

He wasn’t speaking into his TV remote when he said that, but he could have and the device would have known exactly what he meant.

Here’s the complete video interview, part of SiliconANGLE’s and theCUBE’s coverage of the Comcast CX Innovation Day event. (* Disclosure: TheCUBE is a paid media partner for the Comcast CX Innovation Day event. Neither Comcast, the sponsor of theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE

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