Comcast, Charter taking wildly differing approaches to set-top boxes

Two years and five months after its initial launch in Boston, Comcast's (NASDAQ: CMCSA) X1 set-top box has been deployed in about 5 million homes. And Comcast executives say they're thrilled with X1's early yield, noting that X1 customers engage in about 20 percent more VOD transactions, watch more linear TV and generally deliver higher ARPU than those that use the legacy platform. Comcast also says it's seeing a 20 percent reduction in voluntary churn among its X1 customers.

But a similar product from Charter Communications (NASDAQ: CHTR) shows how such products can offer many of the same services through a significantly different setup. While Comcast's X1 packs what is perhaps a richer experience via advanced IP hardware, Charter's Spectrum Guide delivers many of the same benefits through a far less expensive deployment strategy. Specifically, Spectrum Guide uses cloud-based computing technology made by ActiveVideo to render the IP interface at the server level.  That interface is then encoded into MPEG-2 video and sent to legacy set-tops through a video channel reserved for VOD.

"If successful, this (Spectrum Guide) could substantially reduce set-top box replacement cycles, and therefore reduce capex, and it would facilitate a radically faster deployment of this advantaged user experience," noted media analyst Craig Moffett. "At about $300 per advanced box and $70 per slave box, the costs that can be avoided by ActiveVideo's technology are dramatic."

For more on this topic, check out this FierceCable feature.

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