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Why Comcast’s X1 Set-Top Box Is the Key to Its Video Business Growth

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Aug. 17 2016, Updated 11:04 a.m. ET

X1 set-top box

X1 is Comcast’s VoD (video on demand) platform. Comcast’s (CMCSA) X1 set-top box has proved to be a game-changer for the company. The X1 set-top box has been a key product that is driving Comcast’s video business. It offers search and personalized recommendations through Comcast’s cloud computing infrastructure.

Currently, 40% of Comcast’s video customers are viewing content through the X1 set-top box. When it comes to X1, 85% of Comcast’s video customers use Xfinity On Demand on a monthly basis. They view content an average of 29 hours per month. About 42% of Comcast’s video subscribers use its TV Everywhere platform on a monthly basis to view content.

Comcast also stated during its fiscal 2Q16 earnings call that it has observed that churn is significantly down with the X1 set-top box. The company further stated that it is also “getting more additional outlets per box,” which is driving up the ARPU for the company’s video business.

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Comcast also indicated during the company’s fiscal 2Q16 earnings call that it expects its X1 set-top box penetration to be 50% by the end of 2016. Comcast rolled out 885,000 set-top boxes in fiscal 2Q16. The company expects its X1 set-top box penetration to be in the range of 80%–85% in the medium to long term.

Comcast’s video business

Comcast added around 90,000 video subscribers in the trailing 12 months. That’s significant in the face of rising competition from video streaming operators such as Netflix (NFLX).

Comcast’s video revenue was $5.6 billion in fiscal 2Q16, up by 2.8% over fiscal 2Q15. The growth in revenues was driven mainly by rate adjustments and customers subscribing to additional video services, including premium pay-TV channels.

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