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Comcast Leads Way to Broadband

Jun 17, 2007  •  Post A Comment

Sam Raimi’s third installment of the “Spider-Man” film franchise has earned more than $300 million domestically since its May 4 release.
So what’s an A-list director to do for a follow-up? Turn to the small screen.
Mr. Raimi’s production company premiered a new seven-episode thriller online June 6 at Fearnet, a horror film broadband and VOD service from Comcast, Sony and Lionsgate. A new three- to five-minute installment will debut online and on VOD each week through mid-July.
Mr. Raimi’s presence on the digital network underscores the investment being made in broadband video by Comcast, which has been the most aggressive cable operator in adding online video to its “The Fan” section on Comcast.net and to online video sites it owns. Fellow cable operators have largely ignored the broadband video opportunity.
With 24 million cable customers and 12 million high-speed Internet service customers, Comcast has the most to lose as consumers turn to the Web to watch TV. Yet as they do, the cable operators through whose very pipes many of those videos are riding are finding the Internet represents both a revenue stream and a threat. Many are ignoring that threat.
The window of opportunity will close soon for cable operators to pursue broadband video as viewers shift to watching videos on YouTube, Veoh and Break, analysts say.
Will Richmond, president of broadband research firm Broadband Directions, identified 12 key players in online video in a recent report: Amazon, AOL, Apple iTunes, BitTorrent, Comcast, Google/YouTube, Joost, Microsoft MSN, Microsoft Xbox Live, Netflix, Wal-Mart and Yahoo. Comcast is the only cable operator on that list.
Cable operators need to do more, Mr. Richmond said. “They need to offer programming over broadband connections the same way it’s being offered on any number of sites and aggregators,” he said. “The list is growing every day. They need to make sure they don’t get preempted by offerings that are more personalized or valuable to subscribers who are paying them a lot of money each month.”
Cable operators have been sluggish to adopt broadband initiatives because they are focused on their set-top boxes, video-on-demand and the rollout of voice service, Mr. Richmond said.
But they may have to switch gears soon or risk losing the opportunity. “At what point do we hit the cut-off and say cable companies can no longer catch up online?” said James McQuivey, analyst with Forrester Research. “It probably comes soon as we see more announcements like YouTube and Apple (working together with AppleTV).”
Cablers want to protect their pay tiers from the inevitable online encroachment, though. “Online video is a threat to their core business and to their subscription business and a threat to their ad revenue,” Mr. McQuivey said. “If people aren’t watching the cable channels and instead are tuning in to the online version on Joost and at Comedy central.com, then suddenly Comedy Central is getting extra revenue and Joost is, but the cable company is not.”
In time, he expects most cable operators will offer online video, but they likely will do it through the set-top box only when they absolutely have to.
Comcast, meanwhile, has adopted a blanket strategy with online video, he said.
For starters, it’s a partner in Fearnet. Also, Comcast.net is on board as a distribution partner for the NBC Universal-News Corp. online venture slated for a late summer debut. The site also will distribute CBS content later this summer.
In addition, Comcast.net last year bought online video technology provider the Platform, which powers Comcast.net’s video. The Platform has become one of the technology providers behind the NBCU-Fox project.
Comcast.net plans to launch fancast.com later this year. That site will feature TV clips, other video content and video search. It will be accessible to all Internet users, not only to Comcast.net high-speed customers.
For several years Comcast.net also has offered video clips from networks including ABC News, Food Network, HBO and others.
The net result for Comcast.net is 80 million monthly video views and 15 million unique users, the company said.
Comcast CEO Brian Roberts has said that over the next five to six years, Comcast.net will generate $1 billion in ad revenue. The company has not released current revenues.
“Comcast feels we are in a good position as the nation’s largest residential ISP and a content developer on TV,” said Comcast.net rep Jen Khoury. “It puts us in a great position to be a leader in providing video over the Web and responding to consumers interested in consuming that video wherever they want to watch it.”
Comcast’s strategy is the most forward-thinking of the cablers, Mr. McQuivey said. “They are trying to make sure, whatever happens, they can succeed. Some of their investments won’t pay off and others will.”
Time Warner has focused its broadband marketing energy on its “Quick Clips” service and a new broadband video player on roadrunner.com. Quick Clips lets customers access short-form video, including Internet videos from CNBC, CNN, the Weather Channel and others, on their TV sets. It’s available in two markets and will roll out to additional markets later this year. While watching linear TV, digital cable viewers can retrieve Web video using the remote.
In February, Time Warner launched a broadband video player on its portal with about 16,000 video clips, including music videos and content from NBC Universal and other networks.
“It is an area where we are learning, but it is not core to our business model,” said Peter Stern, executive VP, product management, Time Warner Cable. “We make billions of dollars on multichannel video and offer high-speed access. The revenue associated with online video is minuscule at this point.”
Cox focuses on speed and features in its marketing as the differentiators for its broadband service. “Cox has a history of leadership in delivering the most speed for the money, and the company has also emphasized its security suite,” said Cox spokesman David Grabert. “On Cox.net the company offers a useful news portal, along with customer service utility options.” He said Cox is evaluating additional content options for the portal, but declined to offer details.
Despite what analysts say about the closing window of opportunity, Mr. Richmond believes cable operators still have time to play offense when it comes to online video. “They want to avoid being put on the defensive, and the way to do that is to experiment with different offerings.”
Tips for Cable Operators
To better compete in online video, cable operators can employ a number of strategies. Here are some tips from broadband video expert Will Richmond of Broadband Directions.
Set up an online store for the purchase or downloading of shows: “Certainly there is a proliferation of these efforts. Having a store where people can buy shows would be a good idea.”
Let consumers program their DVRs online: While this is not technically an online video offering, it’s a feature that can improve both the portal and the DVR while converging the two.
Stream cable programming online: Cable operators should reach out to their natural allies, cable programmers. Cable networks have been slow to adopt online streaming of their shows in comparison to broadcast networks.
Add social networking communities: Sites that include social community features, such as Comcast’s Ziddio user-generated video site, can add value to a broadband Internet service.

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