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October 21, 2004

Comcast and Its Vision

Via the TVPredictions.com newsletter, I found one jewel of an article describing the fiture of cable. Brian Roberts, CEO of Comcast, had some candid comments on the company's strategy for the future when he spoke to students at Wharton. The future as he described it boils down to three letters: VOD (Video on Demand).

Earlier this year, Comcast unsuccessfully tried to acquire Disney in what some analysts thought was a move for Comcast to diversify out from the cable business. Roberts, on the other hand, says it's the wealth of content that he can add to his Video on Demand services that made them such an attractive acquisition candidate.

The article states:

In his talk at Wharton, Roberts made it clear that he believes his company's future hinges on video-on-demand. That, he argues, is why the Disney bid made sense. On-demand allows customers to choose not only what they want to watch but also when. It also lets them control their viewing via functions such as pause and replay. Satellite TV, cable's biggest competitor, offers abundant programming but not two-way communication.

Roberts stated further:

"Television today is a one-way experience. It seems totally clear to me that the personalization of television is the future. Everybody wants to do what they want, when they want. And we happen to have a platform for that, where our competitor, satellite, doesn't. So all of our energy is to give our customers, on demand, the ability to get as much content as possible."

Does the "what they want, when they want" sound familiar? It should if you've been watching the new Tivo advertising blitz that uses a similiar refrain as its mantra. It's clearer than ever that cable operators have their own centralized vision of the future, and that Tivo is more a competitor than a partner.

There is also a glimpse on the difficulties facing the Netflix/Tivo deal in acquiring a large library of content. I think the success of this deal largely rests on the ability of Netflix and Tivo to get enough titles online to make it worth getting the service.

Comcast, which will have five times more subscribers for its VOD service even if Tivo makes it's forecast, has had difficulties licensing content. Roberts says:

"We go to movie companies and say, 'We've got this great on-demand in five million homes, and it will be ten million by the end of this year.' And you know what they say? 'The problem is DVD sales are so good right now that we can't tick off Wal-Mart.' The single largest revenue source for Hollywood is Wal-Mart. How did they get themselves in that situation? And they say, 'I know, I know. We have got to stop giving it to Wal-Mart. They squeezed us on the price last quarter, but we have got to make budget.' That's what's happened with the music business. They were making all of this money on CDs, and one day Napster just took it away."

There is a lot more to the article, so put it on your reading list if your are interested in the mechanics of the industry.

Posted on October 21, 2004

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