Yesterday, the Wall Street Journal reported that Comcast is in talks with Walmart to partner on a new line of smart TVs. The smart TVs would be running Comcast's X1 operating system, which powers the company's Xfinity set-top boxes and Flex streaming media devices. As per Wall Street Journal's report, Walmart would manufacture and promote the X1 smart TVs in its retail stores, potentially under Walmart branding, and also receive a share of recurring revenue generated via these smart TVs - which would likely include a share of advertising spend, and potentially a share of subscription revenue generated via the platform as well.

This is not Comcast's first stab at a licensing deal. The company already licenses X1 out to fellow pay-TV providers across the United States and Canada, including companies like Cox Communications, Rogers, Shaw, and Videotron. In 2019, Comcast extended its X1 platform to include a new device type, a streaming media player that it would offer to its broadband-only customers. This device, the Xfinity Flex, features X1 apps and Comcast content, allowing Comcast to retain a presence in consumers' entertainment systems even as they cut the cord on pay-TV service. Comcast has also announced its intention to license the X1 platform to smart TV makers on a global basis.

Flex and X1 licensing are part of Comcast's strategy to evolve beyond its pay-TV service. As of September, during a presentation at Goldman Sachs' Communacopia Conference, Comcast CEO Brian Roberts reported that over 2 million Flex boxes had been deployed and that roughly 1 million were being regularly used. Roberts referred to the Flex as one of the fastest ramping products Comcast has ever had. As per Brian Roberts, Peacock - Comcast's new streaming service - is the second most-used application on the Flex platform. The Flex's presence in homes, and its ability to drive Peacock viewership, stands to boost Comcast's media advertising business. And similar to Prime Video Channels and the Roku Channel, consumers are also able to subscribe to new services directly through the X1 platform - allowing Comcast to gain a share of this recurring subscription revenue.

A jump to smart TVs would help Comcast grow this business substantially further. Offering its partners revenue shares may also help the platform be more competitive against Roku, Android TV, and Fire TV Edition in the eyes of manufacturers and retailers. The question that remains is more about consumers - can X1 stand up to competition from leading smart TV platforms? High Flex adoption among qualifying Comcast broadband subscribers hints that the answer may be "yes."

Did you know? According to Parks Associates consumer survey data, as of Q3 2020:

• 56% of US broadband households own and use at least one smart TV
• 43% of US broadband households own and use a streaming media player
• 24% of US broadband households receive their home internet from Comcast