Neither company has confirmed the plan, nor acknowledged such talks have happened. It's not unlikely though, given Comcast CEO Brian Roberts' rhetorical question at a recent investor conference. He asked, "We're looking at smart TVs on a global basis, and we're wondering -- can we bring our same tech stack for certain capabilities in aggregation to consumers who are relying more and more on smart TVs?"
That "tech stack" is Comcast's X1 operating system for digital televisions and the subsequent Flex device the software currently operates. Flex is a set-top receiver provided to Comcast's broadband customers who don't want traditional cable service but do want to watch streaming video.
A television partnership between Walmart and Comcast would go well beyond offering mere convenience to more consumers, however. For Comcast at least, such a deal would grant the company much-needed control of a rapidly changing market.
Content is the commodity, gatekeeping is the key
There's a much bigger, albeit nuanced, war being waged than the one between streaming companies like Netflix (NASDAQ:NFLX) and cable TV service providers like Comcast. The real battle is one of platforms (how digital content is carried to consumers).
There's big money on that battlefront, too. For perspective, Roku (NASDAQ:ROKU) drives about twice as much revenue running ads and connecting consumers to streaming channels than it does selling devices. This is also why Amazon's (NASDAQ:AMZN) Fire TV devices are relatively cheap. It's a means to a much more lucrative end. The e-commerce behemoth wants you to sign up for Prime and buy digital entertainment from third parties -- Amazon gets a cut of that sale.
It's this business model that makes the prospect of a Comcast-Walmart partnership so interesting. Comcast arguably has more digital video content to offer consumers than any other single studio, but it has the least effective means of selling it.
Yes, the relatively new streaming service Peacock from Comcast division NBCUniversal is a biggie. It has signed up 22 million viewers just since its public launch in mid-July (Comcast's cable customers were granted early access). That's not all the company brings to the table, though. Comcast is also the owner of ad-supported streaming television service Xumo, which now boasts 24 million monthly viewers. Even less widely known is that Comcast's NBCUniversal is the majority owner of Fandango, and Fandango is now the full owner of Vudu. Fandango's FandangoNow and Vudu both sell a wide array of digital films and TV shows from a variety of studios.
What's missing is just a way to promote this media without relying on platforms Comcast is also competing with. Amazon isn't just the name behind Fire TV hardware; it's also a studio. Roku isn't just a brand of set-top boxes; it's selling several streaming services and ad space. A Comcast-owned platform could readily put Comcast's interests first, even if in a subtle way.
Positioning to promote, collect data
Comcast needs Walmart a lot more than Walmart needs Comcast. The world's biggest retailer already offers a variety of TV brands, including those powered by Roku as well as by Alphabet's Android operating system. That's why Comcast is reportedly sweetening the pot, so to speak, by committing to a revenue-sharing agreement with Walmart.
If The Wall Street Journal's sources are correct about the revenue split, then it points to the growing importance of not just creating content but cultivating a reliable way to promote it. As streaming continues to displace linear cable as the norm, television and movie studios will increasingly need even more certainty their programming is easily accessible.
For Comcast, however, there's even more at stake than just a better opportunity to promote services like its Peacock, or even Xumo or FandangoNow. Comcast is also developing some incredible digital television ad tools. Its One Platform interface introduced in February 2020 grants advertisers "the power to reach all audiences everywhere they are across the full NBCUniversal ecosystem, and enables every impression to be data-informed."
These "cross-platform impression measurement" features, including "OTT co-viewing, out-of-home measurement (OOH) as well as short-form video," would be even more achievable if Comcast designed that television's underlying technology.
That's a bold, brilliant idea, but wouldn't be a game-changer yet. Comcast would have plenty of hurdles to clear even within Walmart stores, not the least of which is relatively poor name recognition. Consumers know the Roku brand and Samsung television sets. They know Android and Vizio. They're less familiar with Walmart's own electronics brand that an X1-powered television would be labeled with, and they've likely not heard of X1 or its subsequent Flex box. Comcast cheered in May that it has deployed over 1 million Flex set-top streaming devices, but the fact is, that's just not very many.
That's why it's unlikely consumers will jump at the chance to own one of these TVs, if they come to fruition at all.
The good news is, at least Comcast seems to know it needs to have a hand in hardware, not just content creation.