Comcast to test its YouTube competitor by the end of the year

Comcast (S CMCSK) is looking to test a new platform for the distribution of online videos through its new X1 cable set-top boxes by the end of the year, the company’s SVP of Video Matt Strauss confirmed during an interview at the sidelines of the TV of Tomorrow Show this week.

Strauss said that the service will be evaluated through what he called “limited tests.” He said that it will have some similarities to YouTube, (S GOOG) allowing content creators to directly upload their videos to a server. These videos will then become available via a dedicated app running on Comcast’s X1 box, which the company has been gradually rolling out across its markets. The Information first published a report about Comcast’s plans to experiment with online video in March, citing anonymous sources.

Strauss declined to comment on the types of content that will be part of those first tests, but said that the focus won’t be on user-generated content, which YouTube obviously started out with. However, YouTube has put a much bigger focus on professionally-produced and serialized content in recent years, and that seems where Comcast is aiming at with this initiative as well. Strauss said that Comcast will be able to offer content producers a number of monetization options, which could include advertising as well as transactional fees, but said that the company is still evaluating its options.

Comcast acquired the online video advertising specialist Freewheel for $360 million earlier this year, and online videos delivered through its set-top boxes could be an interesting way for Comcast to not only generate additional revenue, but also experiment with forms of advanced, targeted advertising that could one day personalize ads on traditional TV as well.

However, Strauss said that adding online video to its set-top boxes isn’t just about making more money, but also about reducing churn. The goal was to target smaller audiences that see high value in certain types of niche content, he said, which have been underserved by the traditional cable line-up.

The cable industry has been held back by the physical limitations of its QAM transmission technology, which only allows cable operators to carry a limited number of channels. With internet video, Comcast would be able to carry a virtually unlimited number of channels, and Strauss mentioned foreign-language TV channels, which could appeal to expats but aren’t widely available on traditional cable line-ups, as one of the areas his company is very interested in.

Comcast already has the rights to distribute many of these imported TV channels in the U.S., Strauss explained, and could make them more widely available on a streaming basis through its X1 set-top box as well as accompanying mobile apps in 2015 or 2016.