Matthew Strauss isn’t a household name in Hollywood yet. But he should be, and possibly will be soon. As Comcast Cable’s GM of Video Services, Strauss oversees the cable colossus’ Xfinity cloud-based X1 platform, video on demand, TV Everywhere, and — starting last year — sales of digitally downloadable movies and TV shows (known as Electronic Sell Through). In other words, he leads the cable industry’s counter-offensive as digital services led by Netflix and ad-zapping DVRs make inroads with pay TV consumers.
Studios and networks are taking notice, and striking deals with Strauss that push the boundaries of technology, and traditional business practices. For example, Comcast and FX have just begun to let VOD customers watch episodes of The Bridge a week before they appear on the channel itself. Deadline caught up with Strauss to find out the latest about that experiment and others that could reshape the medium. Here are his thoughts, edited for length and clarity.
DEADLINE: VOD has been one of Comcast’s top initiatives. Where do things stand?
STRAUSS: I have a long history with VOD. I’ve been working on this for almost 13 years now. About 70% of our digital subscribers use on demand every single month, and by the end of this year we’ll have 200,000 hours of on-demand content available. We surpassed our 30 billionth program viewed on demand last year. So this is something that has gone from almost an infancy, novelty kind of product and now is deeply entrenched. For the first time we now have the top 100 rated Nielsen shows available on demand. We’re working very closely with Nielsen to ensure that the content gets rated.
DEADLINE: You just broke ground in a VOD experiment with FX’s The Bridge.
STRAUSS: That is correct. [FX chief] John Landgraf and FX are incredibly innovative and creative in their willingness to explore uncharted territory. There are certain shows that actually are generating as much, if not more, of their ratings from time-shifting. The Bridge was one of those series. And the idea we had was — what would happen if we premiered it a week earlier on demand and we disabled the fast-forward in an effort to see if we can pull viewers who were DVRing the show into an on-demand window? We premiered this two weeks ago somewhat quietly. The first episode of The Bridge aired on a Wednesday and at the end of that episode, if you were to go to on demand, not only was Episode 1 available instantly, but so was Episode 2. When Episode 2 premiered on FX our customers had access to Episode 3. So we’re effectively one week ahead.
DEADLINE: What did you find?
STRAUSS: This is still early so you have to take all of this with a grain of salt. But when we compare Comcast households versus non-Comcast households, live ratings were 63% higher in Comcast households. And when we look at the L-3 ratings, 18-to-49-year-old demo, in Comcast households they were 84% higher versus non-Comcast households. When you really break it down to VOD usage — this is staggering so it almost doesn’t seem real — the VOD usage in Comcast households versus non-Comcast households was 878% higher.
DEADLINE: What does that do for FX?
STRAUSS: If we can grow audience for the show, then we should also see a lift in live ratings. And we’ve seen a lift in the live ratings for The Bridge as well. We are putting a lot of marketing effort behind this. But when we talk about the power of the on-demand platform, a decade ago we couldn’t even get the programmers to give us the best shows on demand. Now we went way past that: We’re talking about testing new windows.
DEADLINE: Consumers hate ads. Why would anyone with a DVR watch VOD where they can’t skip ads?
STRAUSS: I don’t know if I would characterize it as “consumers hate ads.” If you ask somebody, “would you rather see a program without ads or with ads,” instinctively you’d say, “I want to see without ads.” When you look at DVR behavior, roughly 50% of the time people watch the ads. So even when you have those capabilities, customers for whatever reason still do watch ads.
DEADLINE: What about the 50% who don’t?
STRAUSS: We’re very much focused on finding ways to make advertising more effective where it’s more addressable. We implemented across our footprint dynamic ad insertion capability which now give programmers the ability to insert ads not only pre-and post-roll but also in the middle. Those can be the exact same ads that were in the C-3 window and also allow the programmers to get C-3 or C-7 credit but also gives programmers the ability to create different ad loads which can be more abbreviated and more targeted. Part of this is how we’ve been able to offer more bankable programming. For the most part, the customer would rather have the option to watch a show with ads versus not have that option at all.
DEADLINE: You made some comments recently that suggested Comcast might introduce a service by year-end that would compete with YouTube. What’s that all about?
STRAUSS: That got misinterpreted. The comment that I made was that our ambition is to cast a very wide net and give customers access to all types of content. Not just professional content, but also other types of non-linear or short form content or even other forms of multicultural programming.
DEADLINE: Could I upload my own videos?
STRAUSS: Those are all capabilities that we are exploring. That got interpreted as, then we must be looking to create a YouTube competitor. And that’s not really our focus or our ambition at all. Our focus and our mission is to give customers unprecedented access to the most robust programming, whether it’s user-generated video or some of the professional video that’s currently available on the web. We’re going to be introducing the capability where our customers will be able to use their phones to send videos that they take — both live and recorded — to the TV. It’s simply giving customers more access to more content on more platforms.
DEADLINE: BTIG analyst Richard Greenfield recently posted a TV Everywhere program where the same ad ran over and over again. How hard is it in for you to persuade advertisers to mix it up?
STRAUSS: I don’t want to call that an anomaly, but I think there’s a recognition that we want to get to an ad model that is more balanced. We expect that this will work its way out and we’re very focused on it. We do not want to do anything but have a good experience for our customers. I think the programmers subscribe to that as well.
DEADLINE: Executives at Time Warner and Fox say that TV Everywhere is coming along too slowly. Has there been too much promise and not enough action?
STRAUSS: The ambition of TV Everywhere when it was laid out five years ago was very clear: giving people access to what they want, where they want, and when they want. At the time, tablets didn’t even exist. Nobody was thinking about providing TV Everywhere content on various game consoles or devices. It was thought of as a web product. Without a doubt we have made significant strides in unlocking the content. You’d be hard-pressed to find a network — premium, broadcast, or cable — that has not put forward a TV Everywhere strategy. The second piece was simplifying authentication. This is one where, if I’m being candid, was challenged. There’s been a lot of learnings over the years and how we try to simplify authentication. And we’ve made significant progress there as well whether it’s things like in-home auto authentication, or allowing customers to use Facebook Connect, or giving customers the ability to stay signed in to their TV Everywhere offerings without having to constantly sign in. The third leg of the stool is awareness. You still have many people who don’t know TV Everywhere exists, who don’t realize that it’s free and that’s included.
DEADLINE: Comcast just disclosed strong TV Everywhere figures from the World Cup.
STRAUSS: We saw over 13 million live streams of the World Cup. The Sochi Olympics had 8 million live streams. So between Sochi and the World Cup we’ve seen a tremendous lift in TV Everywhere usage.
DEADLINE: Are you concerned about planned online streaming services from Dish Network, Verizon, and Sony? They’ll be national services offering a lot of the same channels that Comcast has.
STRAUSS: Competing with multiple providers is not uncharted territory for us and we have a lot of confidence in the products and services that we deliver to our customers. We also think there’s a lot of value in how we bundle our video products for high-speed data and telephony. We believe the highest value is in the triple play, and we believe the best product in the market is X1. We are seeing a lot of very positive metrics that give us confidence that that is competitively something that our customers are leaning toward.
DEADLINE: Comcast has caught Hollywood’s attention since November with your Electronic Sell Through home video initiative.
STRAUSS: When we introduced Electronic Sell Through we thought that the Achilles’ heel in the industry was the seamless access to the television, making it really really easy for somebody to purchase and own a movie through the television. Also giving them confidence that if they purchase the movie that they would be able to easily access it on their guide and also have access to it on the web and on mobile and other platforms. Even though [Comcast] only serves about 20% of TV households in the country, on a national basis we became almost immediately one of the top digital distributors. Since then we have entered into deals with six studios. We believe we will be adding additional studios going forward.
DEADLINE: What do you have planned?
STRAUSS: We have been partnering very closely with the studios. That gives us the ability to experiment and do different things. For example when Warner Bros. launched The Lego Movie a month or so ago we were not only able to offer that four weeks early but we offered it for $10 to our customers as a benefit, as the value of being a Comcast customer. You’re going to see us continue to lean into this. Not only has EST become an opportunity for us on movies but we think there’s an opportunity on TV as well. Primarily on prior season TV. As you know we offer the current season for free, but on a prior-season basis we have been loading up our servers to give customers the ability to purchase full seasons of TV shows — and even offer TV shows that aren’t coming through cable. We offer [Netflix’s] House Of Cards and we’re planning to offer Orange Is The New Black soon.
DEADLINE: What kind of market share do you have now compared to iTunes or Amazon?
STRAUSS: It’s hard for me to answer that question. We do not yet have the same volume of electronic sell through titles as we will toward the end of the year. So you almost have to look at it on a title-by-title basis. And on a title by title basis primarily around new releases we are consistently one of the top digital distributors in the country.
DEADLINE: You’re one of the top two, three…five?
STRAUSS: We’re definitely one of the top two.
DEADLINE: The other one is iTunes?
STRAUSS: That’s probably a fair assumption. The way I would characterize this, though, is that we’re just getting started. A lot of people still don’t understand digital ownership. It allows us to move further upstream in partnering with studios in different ways and you’re going to see us very soon start to introduce other types of ways of how we partner with the studios to market and sell movies across all windows.
DEADLINE: Your digital sales don’t yet enable buyers to access movies from the industry’s UltraViolet digital lockers.
STRAUSS: Since we’re one of the founding members of the Digital Entertainment Content Ecosystem [alliance] it’s something we’re absolutely evaluating although it’s not something that we’ve implemented to date.