While its traditional cable video business is plenty hot right now, Comcast reportedly has a potential backup plan just in case virtual MVPD services from competitors including Dish Network, AT&T and Google take off in popularity and begin to gobble significant market share.
According to Bloomberg, Comcast has accumulated national OTT rights to numerous cable programming networks. Most of these rights have been enabled by “most favored nation” clauses in licensing contracts. After negotiating OTT rights with smaller pay-TV rivals like Dish, programmers are compelled by MFN clauses to approach Comcast and ask if they would like similar OTT distribution rights. Comcast is simply saying yes to these overtures, a company rep told FierceCable.
The Bloomberg report conceded that Comcast still has no current desire to launch a national OTT service. Comcast finished 2016 up 161,000 pay-TV subscribers—its first video gains in a decade. Revenue from video services was up 4% last year to $5,647 billion.
“When you really try to evaluate the business model, we have not seen one that really gives us confidence that this is a real priority for us,” Matt Strauss, Comcast’s executive VP for video services, said at a conference in November. “There is significantly more upside and profitability in going deeper and deeper into our base first versus following a video-only offering OTT.”
But the possibility of nationally distributed virtual services could quickly change Comcast’s mind. DirecTV Now, for example, amassed 200,000 customers in the first 31 days after its Nov. 30 launch, parent company AT&T said. And Dish’s Sling TV has nearly 1.2 million subscribers, according to Leichtman Research.
For its part, Comcast controls its own powerful programming conglomerate in NBCUniversal, which dovetails nicely with any amassed collection of national OTT rights. However, as Bloomberg also noted, it would still have negotiating work to do in order to launch a vMVPD service.
Notably, long-term deals signed with Disney (2010) and CBS Corp. (2012) would need to be renewed to include OTT rights.