Posts for 'Comcast'

The two new boxes TiVo unveiled last night - the Premiere and the Premiere XL - go right to the top of my list of most impressive devices that handle both broadcast and broadband content in one seamless experience. The new boxes continue TiVo's pattern of always being one step ahead of the competition in delivering an outstanding user experience. All of that is the good news. The bad news is that unfortunately, nothing I learned in my briefing earlier this week with Jim Denney, TiVo's VP of Product Marketing, suggests that these boxes will find their way into any more than the relatively few homes that prior TiVo boxes have.

First the boxes themselves. The key Premiere innovation is that TiVo now elegantly recognizes broadband sources such as Netflix, Amazon, Blockbuster, YouTube and hundreds of others as bona fide content options, right alongside the customary broadcast and cable channels. That means that when you do a search for a specific TV program or movie, TiVo returns all the viewing options. Say for example it's Saturday night and you search for the classic movie "Raising Arizona." It may be on a cable channel the following Tuesday, but you want to watch it now. Well it is also available from Netflix's Watch Instantly. Assuming you've linked your Netflix account to the Premiere, a couple of clicks of the remote and you're watching right then. That type of all-in-one-box convenience isn't available elsewhere.

The TiVo browse and recommendation experience is tremendously improved also with a new "Discovery bar" - a strip of artwork and images from the programming that adds a lot of zip to the previously text-heavy browsing UI. Selecting an image triggers an expansion window with relevant details (program description, air time, cast, etc.) You can then immerse yourself in a "6 degrees of Kevin Bacon" IMDb-like experience by subsequently selecting an actor, subsequent movies, co-stars, etc, all in a rich, graphical interface. You can also select "Bonus Features" and immediately start reviewing accompanying clips from YouTube.

TiVo is also introducing "Collections," a set of curated categories like "Oscar Winning Films," "Sundance Award Winners" and "AFI's 10 Top 10" which, with accompanying artwork that are another quick, fun new way to browse for what's on (again these collections tap all broadcast and broadband sources). The gorgeous user experience is all built on Flash and is formatted for HD widescreen, to maximize the amount of real estate used. Another first for TiVo is a full QWERTY keyboard that slides out of the remote control for enhanced navigation.

That's a lot of new goodness from TiVo, which as expected comes at a price. The Premiere, with 320 GB of storage (enough for 45 hours of HD recording) is $299 and the Premiere XL, with 1 TB of storage is $499. Best Buy is again highlighted as a key marketing partner. Then of course there's the $13.95/mo TiVo service charge.

These are basically consistent with previous prices, suggesting that yet again TiVo will bump up against the brick wall of most consumers' resistance to buying expensive hardware. No matter how cool TiVo's boxes have been over the years, this is TiVo's traditional Achilles heel and it doesn't seem likely to lessen with the Premiere. When I highlighted this issue Jim allowed that the purpose of the standalone box is to be a "crucible of innovation" and that it is intended mainly for "discerning customers" (my interpretation: TiVo itself doesn't plan to sell a ton of Premiere boxes).

To address the sell-through problem, TiVo has worked hard to develop "TiVo-inside" relationships with video service providers, so that it can become more of a software and services company. For instance, I've been getting my TiVo service as part of my Comcast set-top box for a while now. With the Premiere announcements, TiVo said that RCN, a smallish American "overbuilder" and Virgin Media, a significant U.K. operator would include the Premiere features in their new set-top boxes, which is great.

However, no plans were revealed for what Comcast, by far the largest operator with TiVo inside, will do with the Premiere. In fact, one sticking point for Comcast is almost certainly the very access to broadband content that TiVo is trumpeting with the Premiere. My Comcast box frustratingly disables all of the previous "TiVoCast" broadband features I used to enjoy on my Series 2 box as Comcast seeks to maintain its "walled garden" approach. While RCN may be aggressive about providing access to 3rd-party broadband sources, I'm doubtful that Comcast will be given their own extensive TV Everywhere plans. That raises doubts about whether Comcast's TiVo customers will ever see the Premiere's full range of features.

And so all that brings us back to where TiVo always seems to find itself - with market-leading devices that have serious hurdles to widespread consumer adoption. I really hope there's a forthcoming breakthrough this time around for TiVo. Otherwise history will repeat itself yet again and TiVo will continue to be a well-respected, but relatively marginal player in the digital media landscape.

What do you think? Post a comment now (no sign-in required).

I hope for Google's sake that it understands the cost to build its 1 gigabit/second ultra high-speed fiber network experiment announced today could be $750 million or more. Even for Google that's a very big number, especially considering the company has said it has no intention of actually pursuing this as a business. Of course, we don't know exactly what Google is forecasting its project costs to be, but using Verizon's FiOS numbers wouldn't be a bad starting point to do the math. So here goes.

Google said it would offer the gigabit service to between 50,000 and 500,000 people. Let's start at the high end of that range. Verizon has disclosed that it will spend $18 billion to pass approximately 18 million homes in its footprint with its FiOS fiber-to-the-home network. It's not fair to do a straight average and assume that Verizon is still paying $1,000/home passed given that its costs have no doubt declined over the years. However, in Google's case, since it has approximately zero experience laying fiber in neighborhoods, and won't get the same level of vendor discounts that Verizon enjoys, it is probably fair to assume Google will spend at least $1,000 per home passed. So if it goes all the way to 500,000 homes, that's $500 million in neighborhood build-out costs.

But that's only to wire the neighborhoods, then the service has to be deployed in the homes themselves. That means in-home wiring, on-premise equipment, labor, trucks, insurance, overhead, etc. Estimates for Verizon's per home cost vary, but $500 is in the range often cited. In Verizon's case they're also deploying a set-top box to deliver TV, which Google hasn't announced plans to do (more on that below), so that cost should be deducted. But on the flip side, once again, because Google has never wired a consumer's home (that I'm aware of anyway) it has a steep learning curve ahead of it, meaning its costs could be much higher than Verizon's.

But to make things easy, let's just use the $500 per installed home. So 500,000 homes at $500 apiece, another $250 million for the project. Add it to the $500 million for the neighborhood build-outs and the total is $750 million. This assumes Google decides to go all the way to 500,000. Obviously if it stopped at 50,000, the costs would be a lot lower.

Executives at cable operators and telcos - who build and operate residential networks for a living - are very familiar with modeling network deployment costs. But I wonder, how familiar do you think Google is? Does it know what it has bitten off here? And for what benefit exactly - to test next-generation apps? Hmm. Everyone knows video is the biggest bandwidth hog; an expensive experiment isn't going to change that. And also remember, Google only plans to sell broadband Internet access, not a full bundle with TV or voice. It says it will do this at competitive prices, which means around $50-$100/mo. At these revenue levels and with operating costs that I haven't even mentioned, it's inconceivable to me that there's a positive business case for Google's gigabit experiment.

I'm all for innovation and for pushing competitors along. But Google's experiment really has me scratching my head. No doubt the folks at Verizon, Comcast and other big broadband ISPs are wondering as well. It's one thing for Google to throw $2.5-$3 million at a 52-second Super Bowl ad, but quite another to be contemplating a $750 million experiment with ambiguous goals. What am I missing?

What do you think? Post a comment now (no sign-in required).

Looking at Netflix's Q4 '09 and full year '09 results released late last Wednesday, plus Netflix's performance over the last 3 years, I have concluded the company has officially entered a "virtuous cycle." For those of you not familiar with the term, a virtuous cycle is when a single change or improvement leads to a cascading series of follow-on benefits which both reinforce themselves and add further momentum to the original change (a hyper "one good thing leads to another" scenario, if you will). Virtuous cycles are extremely rare in business, and when they happen they have profound implications.

The start of Netflix's virtuous cycle is obvious: the company's introduction of its free "Watch Instantly" streaming feature in January, 2007. Streaming has fundamentally changed the Netflix service offering and consumers are increasingly aware of this. Traditionally, Netflix subscription plans were defined by limits - 1 DVD out at a time for $8.99/mo, 2-out for $13.99/mo or 3-out for $16.99/mo. But with the company's decision to remove the confusing original caps it placed on streaming consumption and move to an unlimited model, Netflix is now providing enormous new value at the same DVD rental price points. Netflix has also changed how it advertises its services, strongly emphasizing streaming (see its home page for example). The "unlimited streaming" message is breaking through and Netflix subscriber growth momentum over the last 3 years reflects this.

Subscribers grew to 12.3 million at the end of '09, 31% higher than YE '08. To get a sense of Netflix's momentum, '09 growth handily beat '08 (26%) and '07 (18%) growth. The 2.9 million subs added in '09 was 85% above the company's own 2009 beginning year forecast of 1.56 million sub additions. Looking ahead, the mid-point of Netflix's forecast for '10 is for another 30% growth in subs.

As the streaming benefits have resonated, it's very important to note that subscriber growth is actually getting progressively cheaper for Netflix to accomplish. As the following graph shows, Netflix's subscriber acquisition cost (SAC) has decreased by an impressive 43% from $44.31 in Q4 '06 to $25.23 in Q4 '09 (the 2nd lowest SAC in the company's history). Better still, the quality of these new subs seems high; average monthly churn in Q4 '09 was 3.9%, equal to the lowest churn the company has ever achieved. While Netflix isn't "buying" growth with low-quality additions (an old trick for subscription-oriented businesses), it is however putting more emphasis on the "1-out" service, which, with the addition of unlimited streaming, is an outstanding value for the low-end of the market. Netflix is eager to penetrate this segment, to whom $1 Redbox rentals are very attractive.

While Netflix's financials already reflect the virtuous cycle impact streaming is having on the business, it is likely there is much more to come as streaming takes further hold. Netflix revealed that 48% of its subscribers streamed at least 15 minutes/mo in Q4 '09, up from 41% in Q3 '09 and 26% in Q4 '08 (Incidentally, I think it's conceivable that 80% or more of recently-added subscribers are streaming). But it's just in the last year that Netflix streaming has begun to make the move from computer-only consumption to TV-based consumption, truly making it a mainstream experience. Netflix has inked deals with all the major game consoles (with a Wii marketing campaign beginning in '10), plus numerous CE devices, Blu-ray players, etc. Just ahead is a future where Wi-Fi will be ubiquitous in all new TVs and Netflix's deals with all the major TV manufacturers will ensure it is even more front and center for consumers.

I'm now gaining more confidence that this will indeed happen, especially for these networks' original productions. Netflix is simply getting too big to ignore. It represents a whole new revenue opportunity for premium channels, plus an important loyalty-building outlet. Further out though, while Netflix CEO Reed Hastings says he wants the company to be a distributor for these premium channels, I think it's nearly inevitable that Netflix will compete head-on with them for Hollywood's output. Economics dictate that eventually it makes more sense for Netflix to bid directly for Hollywood rights than work through a premium channel middleman.

In fact, Netflix already has tons of Hollywood relationships, and its recent deal with Warner Bros, creating a 28-day DVD window is emblematic of how Netflix looks at streaming content acquisition going forward. In that superb deal, which was ludicrously criticized by some, Netflix simultaneously helped a critical partner sustain its DVD sales window, while gaining cheaper access to more DVD copies on day 29 and increased streaming rights for catalog titles. As Hastings pointed out on the Q4 earnings call, given the inconsistencies in DVD release strategies, most consumers have little-to-no idea when a title becomes available on DVD, so, while still early, opening up the 28 day window has caused no subscriber complaints. And the company's analysis of subscriber "Queues" indicates, just 27% of requests are for newly-released titles.

Importantly, Netflix's strategy is to pour savings from its DVD deals into streaming content acquisition. As I noted recently, Netflix's detailed subscriber data and usage analysis gives it a huge asymmetric advantage in negotiating additional streaming licenses from Hollywood. Netflix can surgically concentrate its resources on only those titles it knows its subscribers will value. Over time, as DVD sales continue to collapse, Netflix will be there to offer its subs a broader and broader rental selection.

The biggest challenge to Netflix for streaming content acquisition is how much it chooses to spend. Netflix's relatively small size among giants like Comcast and others is what prompted me to suggest over a year ago that Microsoft would acquire Netflix. I'm officially retracting that prediction now, as 2009 demonstrated how much streaming progress Netflix can make on its own. In fact, I think all rumors of a possible Netflix acquisition are off-base; I see the company remaining independent for some time to come.

Netflix is now riding a serious wave and its executives recognize the mile-wide opportunity ahead of it. The product is immeasurably stronger and more appealing with unlimited streaming included. That's in turn leading to impressive sub growth with much-reduced SAC and improving churn. The number of devices bridging Netflix to the TV is growing and portends ubiquity at some point down the road as these devices further leverage Netflix's platinum consumer brand. Streaming content selection is improving, bringing side benefits of reduced DVD postage and inventory costs. With millions of subscribers Netflix now has both the economics and the scale to be a very significant player in the video ecosystem.

Last but not least is a very favorable competitive climate. Aside from a hobbled Blockbuster, astoundingly, Netflix doesn't have any other direct DVD subscription/online streaming hybrid competitor (Amazon and Apple, are you paying attention?). And while Comcast and other multichannel video programming distributors ("MVPDs") are rolling out TV Everywhere services (5 years later than they should have, in my opinion), these are still early stage, and still encumbered by archaic regional limitations. Indeed, Netflix's growth may well cause these companies to consider their own over-the-top plans, as I've suggested.

For years I have been saying that broadband video is the single most disruptive influence on the traditional video distribution value chain. Netflix's success with streaming and the consequences that are yet to play out are resounding evidence of this. Above and beyond YouTube, Hulu, Amazon, Apple and others, Netflix is by far the most important video distributor to watch.

What do you think? Post a comment now (no sign-in required)

This morning Brightcove is making its first TV Everywhere ("TVE") related announcement, introducing its "TV Everywhere Solution Pack" (TVE-SP), which is the Brightcove 4 enterprise edition augmented with new components and services to support TVE rollouts. It is also unveiling a strategic alliance with Ping Identity to integrate its PingFederate security software with TVE-SP, to enable user authentication and authorization. Lastly, Brightcove has promoted Eric Elia from VP of Professional Services to VP of TV Solutions, charged with leading the company's TVE initiatives. Brightcove's CEO and founder Jeremy Allaire briefed me last week.

To understand how TVE-SP fits in, it is important to quickly review the TVE model. To date, most discussion of TVE has focused on multichannel video programming distributors ("MVPDs") providing their subscribers with online access to TV programming through their own portals or services, for no extra charge (e.g. Comcast's Fancast Xfinity TV). Receiving less attention so far is that the programmers who agree to participate in MVPD portals will likely require they are also able to offer their same programs on their own sites, which are an increasingly important part of their brand identity and direct-to-consumer focus.

Something else that hasn't received a lot of attention to date is that not all MVPDs will follow Comcast's model of managing, hosting and delivering the online programs themselves. Rather, some MVPDs will prefer to provide just the barebones online navigation, with TV programmers providing an embeddable video player and also delivering all the programming. Less-resourced MVPDs could end of relying heavily on programmers to power their TVE offerings. Where programmers already have online video platforms such as Brightcove in place, these OVPs are in a position to influence how TVE operates. (As a sidenote, I've heard multiple times that Comcast itself is also offering a white labeled version of its FXTV portal to other MVPDs).

All of this means there's likely to be plenty of heterogeneity in TV Everywhere rollouts. Recognizing this, a key part of Brightcove's product strategy is aligning with Ping to use PingFederate and the SAML 2.0 standard for user authentication and authorization. SMAL is used to exchange data between domains (e.g. between a TV programmer, whose web site visitor is trying to access a certain program and an MVPD which holds that user's subscription profile). This type of secure exchange will be essential for TV programmers to offer their own programs on their own sites in a TVE world.

SAML has been widely used in the SaaS business applications and Ping itself lists Comcast, Cox, Bell Canada and Discovery, among others, as customers. However, I suspect these are likely on the enterprise side, not the consumer-facing side. As a result, Brightcove's approach will require significant testing before it will be deemed acceptable by MVPDs. In fact, Brightcove's new white paper indicates that additional standards are required and that some of this is underway at CableLabs, the cable industry's development lab.

It's also worth noting that thePlatform (owned by Comcast) has 4 of the top 5 U.S. cable operators, plus Rogers in Canada, as customers, and ExtendMedia has the major U.S. telcos, plus Bell Canada, as customers. With Brightcove powering video at 60+ TV programmer websites, there are no doubt some interesting dynamics ahead as these OVPs' customers negotiate their TVE relationships and influence the interoperability of their respective technology providers. For its part, thePlatform, which also supports many content providers' video, introduced last November an "Authentication Adaptor" as part of its media publishing system to smooth the authentication and authorization process for programmers offering TVE shows on their own sites.

Confused yet? This is pretty dense stuff, and illustrates some of the hurdles ahead for TVE's widespread rollout. Meanwhile, lurking over TVE's shoulder are the raft of over-the-top alternatives (e.g. Netflix, Boxee, Apple, Xbox, YouTube, etc.) that are sure to gain additional traction with consumers (as a sidenote, yesterday's Best Buy Sunday circular promoted no fewer than 5 Blu-ray players as Netflix compatible, with each showcasing the Netflix logo).

As the TVE story unfolds, Brightcove is sure to be in the middle of the action given its market presence and technical capabilities. But how it all shakes out remains to be seen.

What do you think? Post a comment now (no sign-in required).

(Note - Brightcove, thePlatform and ExtendMedia are VideoNuze sponsors)

Question: How much difference is there between Comcast offering its TV Everywhere service to its own multichannel video subscribers in its geographical footprint, who have chosen to get their broadband Internet service from another company (e.g. Verizon, AT&T, etc) vs. Comcast offering TV Everywhere services to consumers who similarly get their broadband Internet service from one of these companies (or another cable operator), but happen to also get their multichannel video service from another company (e.g. another cable operator operating in a non-Comcast geographical area)?

If you answered "not that much," then you'll likely have the same reaction that I did upon reading last week's Light Reading article, "Comcast to Expand 'Xfinity' to DSL Subs," which describes Comcast's plan to offer its Fancast Xfinity TV (which I call FXTV) TV Everywhere service to those of its video subscribers who use DSL or some other method to connect to the Internet instead of Comcast's own broadband service by the second or third quarter of 2010.

(As quick background, in December, Comcast launched the beta of its FXTV service, but it's only been available to homes that subscribe to both broadband and video, which is about 14 million out of the 24 million who subscribe to Comcast's video service. Of that 10 million difference, using the 70% national broadband penetration rate, I'd estimate there are about 3 million of Comcast's multichannel video subscribers who use Verizon, AT&T or someone else for their broadband access.)

When I read the article, my reaction was: if Comcast is going to target this group of users, wouldn't the next logical step in FXTV's rollout be to offer it to non-Comcast video subscribers? This is the concept I suggested back in September in, "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players." In that post I argued that with sizable revenue per subscriber gains largely behind it, Comcast' big growth opportunity is to expand into other cable operators' territories, by offering FXTV as a TV Everywhere 2.0 over-the-top service in those areas.

To be sure, I noted that this type of move would be a serious breach of protocol in the insular cable industry, and with today's incomplete FXTV offering it wouldn't be viable competitively just yet anyway. But given nationally-oriented competitors like DirecTV, DISH Network and newer OTT alternatives like Netflix mobilizing, it seems logical that somewhere down the road, Comcast, whose geographical reach today only encompasses about 25% of American homes, will have to go national to stay even.

When Comcast's executives have been asked about the possibility of FXTV as an OTT service they have denied any intentions. With their hands full making sure FXTV is working properly for its current subscribers, that's probably the case, at least for now. Plus, with the NBCU deal facing regulatory scrutiny and the net neutrality debate heating up again, Comcast certainly isn't going to hint at anything that would further expand its dominance. But still, given competitive issues, will limiting FXTV access to its own multichannel video subscribers remain the case? It will be interesting to see if and when this changes.

What do you think? Post a comment now (no sign-in required).

It's time to say goodbye to 2009 and begin looking ahead to 2010.

2009 was yet another important year in the ongoing growth of broadband and mobile video. There were many exciting developments, but several stand out for me: the announcement and launches of initial TV Everywhere services, the raising of at least $470 million in new capital by video-oriented companies, YouTube's and Hulu's impressive growth to 10 billion streams/mo and 856 million streams/mo, respectively, the iPhone's impact on popularizing mobile video, the Comcast-NBCU deal, the maturing of the online video advertising model, the proliferation of Roku and other convergence devices and the growth of Netflix's Watch Instantly, just to name a few.

Looking ahead to next year, there are plenty of reasons to be optimistic about video's growth: the rollout of TV Everywhere by multiple providers, the proliferation of Android-powered smartphones and buildout of advanced mobile networks, both of which will contribute to mobile video's growth, the launch of Apple's much-rumored tablet, which could create yet another category of on-the-go content access, the introduction of new convergence devices, helping bridge video to the TV for more people, new made-for-broadband video series, which will help expand the medium's appeal, and wider syndication, which will make video ever more available.

In the midst of all this change, monetization remains the fundamental challenge for broadband and mobile video. More specifically, for both content providers and distributors, the challenge is how to ensure that the video industry avoids the same downward revenue spiral that the Internet itself has wrought on print publishers.

Regardless of all the technology innovations, high-quality content still costs real money to produce. If consumers are going to be offered quality choices, a combination of them paying for it along with advertising, is essential. While it's important to be consumer-friendly, this must always be balanced with a sustainable business model. In short, no matter what the size of the audience is, giving something away for free without a clear path for effectively monetizing it is not a strategy for long-term success.

VideoNuze will be on hiatus until Monday, January 4th (unless of course something big happens during this time). I'll be catching my breath in anticipation of a busy 2010, and hope you will too.

Thank you for finding time in your busy schedules to read and pass along VideoNuze. It's incredibly gratifying to hear from many of you about how important a role VideoNuze plays in helping you understand the disruptive change sweeping through the industry. I hope it will continue to do so in the new year.

A huge thank you also to VideoNuze's sponsors - without them, VideoNuze wouldn't be possible. This year, over 40 companies supported the VideoNuze web site and email, plus the VideoSchmooze evenings and other events. I'm incredibly grateful for their support. As always, if you're interested in sponsoring VideoNuze, please contact me.

Happy holidays to all of you, see you in 2010!

Daisy Whitney and I are pleased to present the 44th edition of the VideoNuze Report podcast, for December 18, 2009. This will be the last podcast for 2009, and we'd both like to say a huge thanks to everyone who's been listening in this year.

This week I start things off by providing further detail on my experience so far with Comcast's TV Everywhere initiative, Fancast Xfinity TV (or "FXTV" as I call it for short), which was released in beta to 14 million subscribers this week at no additional charge. On the whole I think it's a respectable effort, and in the big picture, is exactly what the company should be doing with online distribution. The main challenge for improving it is getting lots more content from ad-supported and premium cable networks, so that users are more likely to find what they're looking for. For all kinds of reasons, this won't be easy, but if any company can make it happen, it's surely Comcast.

Then Daisy reviews her '09 predictions and shares her "New Media Minute Awards for Excellence." She recognizes Kaltura, 5Min, boxee, Quantcast, and  number 1 pick, MyDamnChannel. All have excelled this year, attracting new venture financing, signing new deals and growing their business. Daisy is particularly proud of MyDamnChannel because it also achieved profitability this year. Listen in to find out more.

Click here to listen to the podcast (14 minutes, 18 seconds)

Click here for previous podcasts

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Amid much anticipation, Comcast launched its "Fancast Xfinity TV" (my shorthand will be "FXTV") service yesterday. FXTV is Comcast's TV Everywhere offering and it will initially be available only to the company's approximately 14 million "dual play" (digital cable + broadband Internet access) subscribers. Comcast is keeping a "beta" label on FXTV for now, to give it some time to work out the kinks. As a Comcast triple-play customer, I have access to FXTV and I played around with it yesterday and last night. While there's plenty of room for improvement, overall FXTV is off to a respectable start.

When dual play customers now visit Fancast they are immediately notified through a prominent pop-up that there's "Great News for Comcast Customers" about online access to over a 1,000 new shows and movies. "Get started" prompts the user to enter their Comcast.net email address and password, then a 17.5MB download begins which includes the Move Networks player and an Adobe Air application. After naming your computer (you're allowed up to 3 devices to access FXTV), the site reloads with the new FXTV Beta branding. All of that worked fine for me.

A prominent window at the top of the page promotes 4 current TV shows, but FXTV misses a big opportunity to immediately demonstrate its value by oddly showcasing just 1 program (TNT's "Men of a Certain Age,") that's not sourced from Hulu. Savvy users will know the rest are already freely available there. Why not promote 4 programs that are only available to FXTV users? And why not include messaging like "Exclusively for FXTV Users!" to remind users of the payoff for having just gone through a download process?

On the positive side, below this window, FXTV promotes programming from premium channels HBO, Starz and Cinemax. As a non-subscriber to Cinemax, when I clicked on "Juno," which had a little key icon, FXTV's authentication process kicked in, prompting a message to subscribe to Cinemax to watch. However, when I clicked "Learn more" my popup blocker interceded which meant I needed to disable it and then reload the page. The Cinemax promotional page that loads is generic from the Comcast.com web site, featuring a graphic of "Gran Torino" and promotions for 3 other movies. Comcast has a golden upsell opportunity when FXTV users click on premium content. It would no doubt improve its conversion ratio if the landing page were customized to load a graphic of the original movie or show selected at FXTV, well merchandised with trailers, clips and other information. A special offer/reward for FXTV users would also help.

Back on the FXTV site, below the premium channel promotions is an area for Full Episodes, categorized by "Celeb News," "The Hot List," "Dramas," etc. Once again, many of the thumbnails link to content that is freely available online and to all other Fancast users. Once again, I'm surprised that Comcast isn't doing more to promote programs that are only available to FXTV users, making it more explicit what's special about FXTV.

I clicked and watched parts of a number of shows and in general my experience was positive. I've read other reviews describing buffering delays, but I didn't experience any issues, or at least anything different than I typically do when starting videos at other sites. One thing Comcast disclosed on the press call yesterday was that FXTV would be available to dual play subscribers outside their homes. Recall that in the 5,000 person trial, users could only access the service from within their homes, so this is a major step forward. I haven't yet tested FXTV remotely, but will do so while in Florida next week.

The biggest challenge FXTV faces is content availability, particularly from the ad-supported cable networks. For example of last week's top 10 rated cable shows, only TNT's "The Closer" and "Men of a Certain Age" are available on FXTV. Among the top 10, there are no sports (football or WWE) or kids shows like "Sponge Bob" (Nick) or "Phineas and Ferb" (Disney) available. Even for #10 show "Keeping up With the Kardashians" the most recent episodes are from Season 2, back in May 2008 - and this is a show that's on E! Entertainment, a channel that Comcast itself owns! There are no episodes offered of my favorite cable show, AMC's "Mad Men."

The content selection on the premium channels HBO, Starz and Cinemax (note Showtime is not yet available on FXTV) is better, but not eye-popping. For example, the only episodes of HBO's "Entourage" that are available are from Season 2 in 2005, despite the fact that Comcast's CEO Brian Roberts specifically demonstrated and highlighted the idea that all episodes of Entourage would be available when he showed the service at the Web 2.0 conference less than 2 months ago. For some reason HBO must have pulled the rights to Entourage in this time.

A lot of the questions on the press call Comcast conducted yesterday focused on content availability and it's clear that obtaining the rights to distribute the full slate of cable programs online is devilishly complex. To be sure, Comcast has made progress, saying it has 27 networks are supplying programming, totaling 12K titles. There's no distributor in a better position to make online distribution happen than Comcast, yet as I wrote last week about Nielsen not yet being able to collect and then synthesize online viewership, Comcast (and other TV Everywhere providers) are subject to forces beyond their control.

Yet another complicating factor is how advertising in FXTV will work. Comcast said that for now, while "nobody really knows what works best," each network will be permitted to experiment with ad loads. It's not clear how long this will go on, nor what role Comcast will play to guide networks to a certain load. In the meantime though, the downside is that the user experience is inconsistent from one network to another. For an offering that's free to subscribers that's not a big drawback, but the lack of consistency does chip away at least a little bit from the overall experience.

Taken together, Comcast deserves credit for getting FXTV out the door just 6 months since announcing it this summer, which is light speed in cable TV terms. There are lots of ways it can and will be improved upon. Gaining credibility with content providers, so that FXTV can beef up its library is priority #1. As I've been saying for a while now, conceptually FXTV is right on all fronts - it preserves the paid consumer model for content providers, offers users enhanced value and helps Comcast and other providers defend against cord-cutting. Hopefully Comcast and other providers will sufficiently invest in these services to let them reach their full potential.

What do you think? Post a comment now.

Following are 4 items worth noting for the Nov 30th week:

1. Alicia Keys concert on YouTube is an underwhelming experience - Did you catch any of the Alicia Keys concert on YouTube this past Tuesday night celebrating World AIDS Day? I watched parts of it, and while the music was great, I have to say it was disappointing from a video quality standpoint -lots of buffering and pixilation, plus watching full screen was impossible.

I think YouTube is on to something special webcasting live concerts. Recall its webcast of the U2 concert from the Rose Bowl on Oct 25th drew a record 10 million viewers. That concert's quality was far superior, and separately, the dramatic staging and 97,000 in-person fans also helped boost the excitement of the online experience. It's still early days, but to really succeed with the concert series, YouTube is going to have to guarantee a minimum quality level. Notwithstanding, American Express, the lead sponsor of the Keys concert had strong visibility and surely YouTube has real interest from other sponsors for future concerts. It could be a very valuable franchise YouTube is building and is further evidence of YouTube's evolution from its UGC roots.

2. Being a Jeff Zucker fan is lonely business - In yesterday's post, "Comcast-NBCU: The Winners, Losers and Unknowns" I said I've been a fan of Jeff Zucker's since seeing him deliver a brutally candid and very sober assessment of the broadcast TV industry at the NATPE conference in Jan '08. My praise elicited a number of incredulous email responses from readers who vehemently disagreed, thinking Zucker's performance merits him being sent to the woodshed rather than to the CEO's office for the new Comcast-NBCU JV.

To be sure, NBC's abysmal performance under Zucker (falling from first place to fourth in prime-time), will be one of his legacies, but I take a broader view of his tenure. A good chunk of NBCU's cable network portfolio came to the company via the Vivendi deal around the time Zucker took over responsibility for cable. Since that time the networks have grown strongly in audience and cash flow has doubled from about $1 billion to a projected $2.2 billion in '09. NBCU added Oxygen (which combined with its iVillage property makes a strong proposition for women-focused advertisers) and The Weather Channel, in a joint buyout with two PE firms.

While Zucker's hiring of Ben Silverman to run NBC was a misstep, NBCU has enjoyed stability on the cable side, with two of the highest-regarded women in TV, Bonnie Hammer and Lauren Zalaznick cranking out hit after hit for their respective networks. A CEO's tenure is always a mixed one, with plenty of wins and losses. It can be hard to know how much of the wins to ascribe to the CEO personally, rather than the executives below, but at the end of the day, NBCU was transformed from a single network company to a cable powerhouse; even Zucker skeptics have to give him some credit for this.

3. Comcast rebrands On Demand Online to Fancast Xfinity TV - yuck! - Largely lost in the NBCU commotion this week was news that B&C broke that Comcast is changing the name of its soon-to-be-launched TV Everywhere service from On Demand Online to Fancast Xfinity TV. Yikes, the branding gurus need to head back to the drawing board, and quick. The name violates the first rule of branding: pronunciation must be obvious and easy. Not only is it unclear how you pronounce Xfinity, it's a an unnecessary mouthful that doesn't fit with any of Comcast's other workmanlike brands (e.g. "Digital Cable," "On Demand," "Comcast.net"). If we're talking about a new videogame targeted to teenage boys, Xfinity is great. If we're talking about a service that provides online access to TV shows, there's no need for something super-edgy. I'd suggest just sticking with "On Demand Online." But even more importantly, priority #1 is getting the product launched successfully.

4. Sports Illustrated demo builds tablet computing buzz - If you haven't seen SI's demo of its tablet version being shown off this week, it's well worth a look at the video here. Never mind that there isn't such a tablet device on the market yet, the rumors swirling around Apple's planned launch of one has created an air of inevitability for the whole category. As the SI demo shows, a tablet can be thought of a larger version of an iPhone (likely minus the phone), providing larger screen real estate to make the user experience even more interesting. It's fascinating to think about what a tablet could do for magazines in particular, along the lines of what the Kindle has done for books. The mobile video and gaming possibilities are endless. Judge for yourselves.

Enjoy the weekend!

Daisy Whitney and I are pleased to present the 42nd edition of the VideoNuze Report podcast, for December 4, 2009.

Today's sole topic is of course the big news of the week, Comcast's acquisition of NBCU. Daisy and I chat about the winners/losers/unknowns that I detailed in my post yesterday. There are a lot of aspects to the Comcast-NBCU deal and the new entity will have wide-ranging implications for the media industry. Listen in to learn more.

Click here to listen to the podcast (15 minutes, 24 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

With Comcast's acquisition of NBCU finally official this morning (technically, it's not an acquisition, but rather the creation of a JV in which Comcast holds 51% and GE 49%, until GE inevitably begins unwinding its position), it's time to assess the winners, losers and unknowns from the deal, the biggest the media industry has seen in a long while. I listened to the Comcast investor call this morning with Brian Roberts, Steve Burke and Michael Angelakis and reviewed their presentation.

Here's how my list shakes out, based on current information:

Winners:

1. Comcast - the biggest winner in the deal is Comcast itself, which has pulled off the second most significant media deal of the decade (the first was its acquisition in 2002 of AT&T Broadband, which made Comcast by far the largest cable operator in the U.S.), for a relatively small amount of upfront cash. Comcast has long sought to become a major player in cable networks, but to date has been able to assemble an interesting, but mostly second tier group of networks (only one, E! has distribution to more than 90 million U.S. homes).

The deal moves Comcast into the elite group of top 5 cable channel owners, alongside Disney, Viacom, Time Warner and News Corp, with pro-forma 2010 annual revenues of $18.2 billion and operating cash flow of $3 billion. It also provides Comcast with a huge hedge on its traditional cable/broadband/voice businesses, as the JV, on a pro-forma basis would be 35% of Comcast's overall 2010 revenue of $52.1 billion, though importantly only 18% of its cash flow of $16.5 billion. On the investor call, Roberts emphasized that the deal should not be seen as the company diminishing its enthusiasm for the traditional cable business, but given the downward recent trends in fundamentals (vividly shown in slides from my "Comcast's Digital Transformation Continues" post 3 weeks ago), the conclusion that Comcast will be relying on its content business for future growth is inescapable.

2. Cable networks' paid business model/TV Everywhere - With Comcast's executives' platitudes about cable networks being "the best part of the media business," the fact that cable networks will contribute 80%+ of the JV's cash flow and the ongoing travails of the ad-supported broadcast TV business, the deal puts an exclamation mark on the primacy of the dual-revenue stream cable network model and Comcast's commitment to defending it (see "The Cable Industry Closes Ranks" for more on this.)

The deal can also be seen as cementing the paid business model for online access to cable networks' programs. Comcast is committed to having online distribution of TV programs emulate the cable model, where access is only given to those consumers who pay for a multichannel subscription service. Much as they may resist acknowledging it, Hollywood and the larger creative community must see Comcast as doing them a huge service by preserving the consumer-paid model, helping the video industry avoid the financial fate of newspapers, broadcasters and music. To be sure, some consumers will cut the cord and be satisfied with what they can get for free online, however it is unlikely to be a large number any time soon. As for aspiring over-the-top providers, they'll need to look outside the cable network ecosystem to generate competitive advantage.

3. Jeff Zucker - The current head of NBCU will migrate into the role of CEO of the JV, greatly expanding his portfolio and influence. Zucker has fought the good fight to preserve the NBC network's status, rotating in new creative heads, shifting Leno to primetime, backing Hulu, etc, but the reality, as he pointed out earlier this year, is that NBCU in his mind has long since become a cable programming company. I've been a Zucker fan since seeing him speak at NATPE in '08 when he laid out a sober assessment of the broadcast business. Through solid acquisitions and execution, Zucker has proved himself to be far more than the wonderboy of "Today" - he's going to fit in well at Comcast and be a great addition to its executive team.

Losers:

1. NBC broadcast network and the JV's 10 owned and operated stations - While Comcast executives said they "don't anticipate any need or desire to divest any businesses" and "take seriously their responsibility" to the iconic NBC brand, the reality is that with the broadcast business contributing just 10% of the JV's pro-forma annual cash flow, the network, and especially the stations, are not just in the back seat of the JV, they're in the third row. Though broadcast contributes 38% of the JV's pro-forma revenue and the deal is being struck near the bottom of the advertising recession, it's hard to see things improving much. Exceptions are the sports division (more on that below), the TV production arm and possibly the news division. The only thing saving the stations is retrans and Comcast's need to appease regulators to get the deal done and keep the regulators at bay thereafter.

2. Other cable operators, telcos and satellite operators - It's never good news when one of your main competitors owns the rights to a good chunk of the key ingredients in your product, yet that's the reality for all other cable operators, telcos and satellite operators. Sure Comcast must be disciplined about throwing its weight around too much, but if these distributors cried when NBCU (and other big network owners) forced bundling and drove fee increases, they haven't seen anything until Comcast runs the renewal processes. With 6 channels having 90+ million homes under agreement plus many others in the JV's portfolio, Comcast is in a very strong negotiating position. As the world moves online, the threat that Comcast eventually says to hell with other distributors and goes over the top itself (a scenario I described here), other distributors have even bigger problems ahead.

3. GE - Yes GE gets about $15 billion in cash and a graceful exit from NBCU, but 20 years since incongruously acquiring NBC, the question burns even brighter, what was GE doing in the entertainment business in the first place? Hasta la vista GE, time to focus on manufacturing turbines and unraveling the woes at GE Capital.

Unknowns:

1. Do content and distribution go together any better this time around - With the disastrous results of AOL-Time Warner still fresh in the mind, it's fair to ask whether vertical integration will work any better this time around. Sensitive to the issue and no doubt anticipating questions on it, Roberts said on the call that this is "a different time and a different deal" and, pointing to News Corp-DirecTV, noted that sometimes vertical integration does work. In addition, he highlighted that the deal's financials are not predicated on achieving any elusive synergies. Still, aside from the obvious benefits of getting bigger in cable networks, the primary reasons cited for Comcast pursuing the deal still have synergy at their core: a slide that clearly says that "Distribution Benefits Content" and "Content Benefits Distribution." As always there are plenty of opportunities to pursue in theory; the challenge is executing on them given the rampant conflicts and turf battles that inevitably ensue.

2. Hulu's future - the online aggregator was literally not mentioned once in the Comcast presentation and its logo only appears on just one of the 36 slides in the deck, yet its presence is hard to underestimate. Hulu is the embodiment of the free, ad-supported premium video model that Comcast is so fiercely committed to combating. So how does it fare when one of its controlling partners soon will be Comcast? In response to a question, Steve Burke said he sees "broadcast content going to Hulu" and that "Hulu and TV Everywhere are complementary products." He also tersely dismissed the much-rumored idea of a Hulu subscription offering. It's impossible to know what becomes of Hulu, but with such divergent interests among the owners, it wouldn't surprise me if Hulu is unwound at some point post closing.

3. ESPN's role - With the JV's NBC Sports assets, plus Comcast's Versus, regional sports networks and Golf Channel, the new JV is primed to play a bigger role in national sports. While Fox Sports and TNT have skirmished for high-profile rights deals with ESPN, the new JV has a much stronger hand to play. It's fair to wonder whether Comcast, which likely sends Disney a check for $70-80 million each month to carry ESPN to its 24 million subscribers, won't at some point say, "hey we can do some of this ourselves" and move to become a bona fide ESPN competitor. In fact, ESPN figures into a far larger Comcast vs. Disney story line in the media industry going forward. The two companies are incredibly dependent on each other, and yet are poised to become even tougher rivals. Expect to hear much more about this one.

4. Consumers - last but not least, what does the deal mean for consumers? Likely very little initially, but over time almost certainly an acceleration of digitally-delivered on-demand premium content - but at a price. Comcast has the best delivery infrastructure, with the JV, soon premier content assets and a persistent, if sometimes incomplete (as with VOD, for example) commitment to shape the digital future. I expect that will mean lots of experimentation with windows, multiplatform distribution and co-promotion across brands. Washington will scrutinize the deal thoroughly, but with continued public service assurances from Comcast, will eventually bless it. Then it will be vigilant for anything that smacks of anti-competitiveness. Consumers should buckle up, the next stage of their media experience is about to begin.

What do you think? Post a comment now.

TV Everywhere is getting another shot of momentum this morning as thePlatform, one of the leading online video platform companies (and a subsidiary of Comcast) is rolling out new features aimed at giving TV networks greater control of their programs in the coming TV Everywhere world.

The key new feature is what thePlatform calls an "Authentication Adaptor," which is a mechanism for networks that want to offer their programs on their own web sites to authenticate users as current paying video subscribers of a multichannel video provider (recall that under current TVE plans it is a requirement to be a multichannel video subscriber in order to access programs online). The authentication adaptor works by instantly checking with appropriate multichannel providers' billing systems and returning a yes/no authentication response for that user.

If the user is authenticated, then the adaptor verifies that the specific program is available for viewing to that user, depending on what tier of service the user subscribes to. thePlatform does this by mapping each individual show to specific channels that each have an ID. The channel IDs are in turn mapped to the multichannel provider's subscription packages. For example if you were to try watching "Entourage" on HBO.com, but you didn't subscribe to HBO the linear channel via your service provider (e.g. Comcast, Time Warner Cable, etc.), your request would be denied. As one can imagine, with the endless permutations of shows, networks, subscription packages and multichannel providers, linking all of this together and delivering fast response times to the user is quite a challenge.

What's also interesting here is that if indeed a request has been denied, a marketing opportunity has been created for both the TV network and the multichannel provider. In the Entourage example above, the denial message could be accompanied by offers to watch now on a pay-per-view basis or to instantly become a subscriber to HBO via Comcast, or to buy the DVD, etc. Or maybe the offer is just to watch free clips to improve sampling. thePlatform supports the creation of these types of rules and integration to appropriate 3rd parties. This is a great example of how TV Everywhere also opens up the instant-gratification online economy to networks and video providers.

The new features gain in importance as thePlatform is also announcing this morning more than 20 TV networks have recently become customers including Fox Sports Networks, E!, G4, Style, Comcast Sports Group (a group of regional sports networks), Travel Channel, Big Ten Network and others yet to be named. As TV Everywhere rolls out next year, TV networks will become increasingly interested in offering their programs themselves, in addition to offering access on their distributors' web sites.

Separate, thePlatform is also announcing today that it is working with Rogers, which is Canada's leading multichannel video provider, on an online video initiative. Though details aren't provided, Rogers recently disclosed that is also pursuing TV Everywhere, so it's probably logical to put two and two together. thePlatform also provides video management services to large American operators Cablevision, Cox, Time Warner Cable, in addition to parent company Comcast. Between the video provider deals and the TV networks deals, thePlatform finds itself squarely in the middle of the TV Everywhere action.

What do you think? Post a comment now.

Yesterday's Multichannel News described a deal between MaxPreps.com and Comcast that shows how well broadband video and video-on-demand fit together, a notion I suggested earlier this year. In the deal, MaxPreps, a provider of high-school sports content (which is owned by CBS), is producing video content in the Houston market for exclusive distribution on Comcast's VOD system. The deal gives Comcast a local sports differentiator vs. satellite and telco competitors, while for MaxPreps it gives valuable access to TV viewers.

Gluing the parties together is Clearleap, a technology provider I last wrote about here. As Braxton Jarratt, Clearleap's CEO explained to me, MaxPreps uses a team of freelance videographers to shoot and edit the video. They're given access to dedicated Clearleap accounts so that they can upload the video for a local MaxPreps content manager to review their work.

The content manager uses Clearleap to make edits, set the release schedule, create playlists if desired, and approve the final package. Clearleap then transcodes the video to the appropriate format and pushes it to Comcast for general availability. Braxton said an hour-long football game could be live within 15 minutes for VOD viewing and that the deal was operationalized in just a few weeks, with very limited capex. In effect the process helps turn VOD into a dynamically programmed content outlet much the way we think of the web.

For those accustomed to working solely online, constant, near real time content updates are routine. But for anyone who has worked with VOD systems, which are characterized by long lead times to get content ingested, prepared and made live, this workflow is a breakthrough. In fact, the MaxPreps-Comcast deal and workflow provides a possible glimpse into how a hybrid broadband-VOD model could work in the future and again why incumbent video providers who already have a set-top box sitting in the living room enjoy certain advantages.

As I illustrated in last week's post about Comcast's results over the last 3 years, incumbent video providers are in a steel cage match for subscribers, particularly higher-spending ones who value digital options. Yet it has become exceptionally difficult to differentiate through exclusive content, as most channels now seek as wide distribution as they can get.

For cable companies, whose roots are in their local communities, local sports VOD content could be a meaningful point of difference. And sports are just a starting point. One can imagine local entertainment, events, and localized versions of national programs all created/managed via the web, but viewed by consumers on VOD. The key is having the technical ability to cost-effectively collect and manage the video, and then insert it into the VOD system.

If the MaxPreps-Comcast deal in Houston scales to additional territories, and Comcast rolls out additional VOD content, I expect other video providers will adopt a similar model.

What do you think? Post a comment now.

A year ago, in "Comcast: A Company Transformed," I asserted that in the past 10 years Comcast has dramatically evolved from a traditional, plain vanilla cable TV operator to a digital TV, broadband Internet access and voice powerhouse. Comcast's Q3 '09 earnings, released last week, offered more proof that the company continues its transformation, capitalizing on consumers' shift to digital lifestyles.

As the chart below shows, Comcast's Q3 results were once again powered by higher digital TV penetration in its cable TV subscriber base, and additional broadband and voice subscribers.

These gains offset the steady erosion in Comcast's total number of cable subs, which at the end of Q3 stood at approximately 23.8 million. Comcast has lost cable subs for 10 straight quarters (totaling 1.25 million) as competition from satellite and new telco video entrants takes its toll. Still, the company has been able to drive revenue per video subscriber steadily higher, to $116.91/month in Q3 '09, reflecting the value of product bundling and success in its business services area. As I said last year, Comcast has effectively moved "up-market," targeting consumers who are willing and able to afford a $100-$200 monthly bill to enjoy the modern digital lifestyle.

Even as the company continues to turn in solid financial performance, Comcast's slowing growth in the core areas of digital TV, broadband and voice are evident in the chart below, which converts the net additions to each service, plus the contraction in basic video subs, into trend lines. With the exception of a few sporadic blips up, over the past 3 years, all 3 areas have shown a steady deceleration in growth. For example, in the most recent 4 quarters (Q4 '08 - Q3 '09), Comcast added 3.4 million digital TV, broadband and voice subs, but this was down 38% vs. the 5.5 million digital TV, broadband and voice subs it added in the year earlier 4 quarters (Q4 '07 - Q3 '08). In the most recent 4 quarters, Comcast also lost 657,000 cable subs, vs. 436,000 in the earlier 4 quarter period, a 51% increase.

Meanwhile, a big bright spot over the last 3 years for Comcast has been the strong progress it has made in converting its subscriber base to digital TV. As the chart below shows, digital TV penetration now stands at nearly 76% of cable subs, up from about 69% at the end of Q3 '08, and about 61% at the end of Q3 '07. Between bundling, new digital channels, HD, VOD, an improved channel guide and DVR availability, Comcast has strengthened the value proposition for subscribers to convert to a digital set-top box, bringing the company higher revenues and a larger universe to deliver new services to, not to mention a stronger defense against possible cord-cutting.

With the slowdown in net additions occurring, Comcast has clearly begun contemplating where new growth, as well as expense reduction, will come from. Given its negotiations for a controlling stake in NBCU, for now it looks like the company's main strategy is deepening its stake in the content business. Since Comcast hasn't even formally acknowledged the negotiations, much less revealed what the financial and strategic benefits any deal might offer, it's too early to weigh the deal's pros and cons.

Should the deal happen though, it will certainly absorb significant management resources. Given how important an effective rollout of TV Everywhere is to the company, anything that distracts from this task would be a setback. Further, as I recently speculated in "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players," Comcast must also keep an eye on competitive drivers that might require it to serve video outside of its traditional geographical footprint (note, Comcast executives say there are no such plans). Doing so would be a herculean management challenge. Last week's research revealing that potentially 54% of Netflix's 11.1 million subscribers now use the service to stream video each month was a reminder that powerful national competitors are steadily building their IP-based delivery businesses through a variety of connected CE devices. These kinds of "over-the-top" services are inevitably competitive to Comcast and other incumbent video providers.

As Comcast has transformed itself into a digital powerhouse it has positioned itself extremely well for continued market leadership. How it chooses to allocate its vast resources, and then how well it executes on its choices will determine how much of its significant potential is realized.

What do you think? Post a comment now.

Following are 4 items worth noting for the Nov 2nd week:

1. Media company and service provider earnings underscore improvements in economy - This was earnings week for the bulk of the publicly-traded media companies and video service providers, and the general theme was modest increases in financial performance, due largely to the rebounding economy. The media companies reporting - CBS, News Corp, Time Warner. Discovery, Viacom and the Rainbow division of Cablevision - showed ongoing strength in their cable networks, with broadcast networks improving somewhat from earlier this year. For ad-supported online video sites, plus anyone else that's ad-supported, indications of a healthier ad climate are obviously very important.

Meanwhile the video service providers reporting - Comcast, Cablevision, Time Warner Cable and DirecTV all showed revenue gains, a clear reminder that even in recessionary times, the subscription TV business is quite resilient. Cable operators continued their trend of losing basic subscribers to emerging telco competitors (with evidence that DirecTV might now be as well), though they were able to offset these losses largely through rate increases. Though some people believe "cord-cutting" due to new over-the-top video services is real, this phenomenon hasn't shown up yet in any of the financial results. Nor do I expect it will for some time either, as numerous building blocks still need to fall into place (e.g. better OTT content, mass deployment of convergence devices, ease-of-use, etc.)

2. Blu-ray players could help drive broadband to the TV - Speaking of convergence devices, two articles this week highlighted the role that Blu-ray players are having in bringing broadband video to the living room. The WSJ and Video Business both noted that Blu-ray manufacturers see broadband connectivity as complementary to the disc value proposition, and are moving forward aggressively on integrating this feature. Blu-ray can use all the help it can get. According to statistics I recently pulled from the Digital Entertainment Group, in Q3 '09, DVD players continue to outsell Blu-ray players by an almost 5 to 1 ratio (15 million vs. 3.3 million). Cumulatively there are only 11.2 Blu-ray compatible U.S. homes, vs. 92 million DVD homes.

Still, aggressive price-cutting could change the equation. I recently noticed Best Buy promoting one of its private-label Insignia Blu-ray players, with Netflix Watch Instantly integrated, for just $99. That's a big price drop from even a year ago. Not surprisingly, Netflix's Chief Content Officer Ted Sarandros said "streaming apps are the killer apps for Blu-ray players." Of course, Netflix execs would likely say that streaming apps are also the killer apps for game devices, Internet-connected TVs and every other device it is integrating its Watch Instantly software into. I've been generally pessimistic about Blu-ray's prospects, but price cuts and streaming could finally move the sales needle in a bigger way.

3. Apple lurks, but how long will it stay quiet in video? - The week got off to a bang with a report that Apple is floating a $30/mo subscription idea by TV networks. While I think the price point is far too low for Apple to be able to offer anything close to the comprehensive content lineup current video service providers have, it was another reminder that Apple lurks as a major potential video disruptor. How long will it stay quiet is the key question.

While in my local Apple store yesterday (yes I'm preparing to finally ditch my PC and go Mac), I saw the new 27 inch iMac for the first time. It was a pretty stark reminder that Apple is just a hair's breadth away from making TVs itself. Have you seen this beast yet? It's Hummer-esque as a workstation for all but the creative set, but, stripped of some of its computing power to cost-reduce it, it would be a gorgeous smaller-size TV. Throw in iTunes, a remote, decent content, Apple's vaunted ease-of-use and of course its coolness cachet and the company could fast re-order the subscription TV industry, not to mention the TV OEM industry. The word on the street is that Apple's next big product launch is a "Kindle-killer" tablet/e-reader, so it's unlikely Steve Jobs would steal any of that product's thunder by near-simultaneously introducing a TV. If a TV's coming (and I'm betting it is), it's likely to be 2H '10 at the earliest.

4. Get ready for the "Anywhere" revolution - Yesterday I had the pleasure of listening to Emily Green, president and CEO of tech research firm Yankee Group, deliver a keynote in which she previewed themes and data from her forthcoming book, "Anywhere: How Global Connectivity is Revolutionizing the Way We Do Business." Emily is an old friend, and 15 years ago when she was a Forrester analyst and I was VP of Biz Dev at Continental Cablevision (then the 3rd largest cable operator), she was one of the few people I spoke to who got how important high-speed Internet access was, and how strategic it would become for the cable industry. 40 million U.S. cable broadband homes later (and 70 million overall) amply validates both points.

Emily's new book explores how the world will change when both wired and wireless connectivity are as pervasive as electricity is today. No question the Internet and cell phones have already dramatically changed the world, but Emily makes a very strong case that we ain't seen nothing yet. I couldn't help but think that TV Everywhere is arriving just in time for video service providers whose customers increasingly expect their video anywhere, anytime and on any device. "Anywhere" will be a must-read for anyone trying to make sense of how revolutionary pervasive connectivity is.

Enjoy your weekends!

Last week's piece in Cable Digital News, "Comcast Forges Excalibur for IPTV" generated a number of emails to my inbox. Despite an oddly misleading title using the primarily telco-oriented term "IPTV," the substance of the article caught lots of people's attention. It explained that Comcast, America's largest cable operator, has set up a new division, "Comcast Converged Products" (CCP) and that Comcast "...would put all IP services, including video, into a common provisioning and management system."

VideoNuze readers who contacted me interpreted Excalibur as being the basis for a potential out-of-market, over-the-top (OTT) plan by Comcast. These folks were referencing a post I wrote in September, "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players," in which I asserted that the next phase of TV Everywhere - "TVE 2.0" as I called it - could well find incumbent service providers invading each others' geographical turf with an IP/broadband-only service. While this type of move would represent a major break from traditional industry norms, I suggested that it may be irresistible for growth reasons and inevitable for competitive reasons.

I talked to a Comcast spokesperson yesterday to learn more about Excalibur and to ferret out any indications that it could indeed be the basis for a Comcast OTT play. According to the spokesperson, Excalibur's mission is to "use IP to deliver cross-platform interactive services." The spokesperson noted that it would be a mistake to think of these as solely video-oriented. Comcast already uses IP technology extensively in its network and Excalibur is meant to find ways to "improve the consumer experience across platforms." One example cited was a feature like checking your voicemail from the Comcast.net portal.

When pressed for specifics on CCP deployments, new products or timelines, the spokesperson said there are no specific plans at this time. The spokesperson did confirm that Sam Schwartz (formerly the head of Comcast Interactive Capital) has been appointed president of CCP, but said the "core Excalibur team" is smaller than the 100 people that CDN reported. I referenced my recent OTT post and the spokesperson had no comment on my speculation Comcast would go out of footprint.

Admittedly that doesn't add a lot of new detail about Excalibur. From my perspective, I'm dubious that the company would reassign Schwartz to anything that wasn't highly strategic. While using IP to enhance the customer experience is worthwhile, Comcast has major competitive battles brewing that are critical to focus on. Yesterday's news that Apple is floating a $30 subscription offering is a reminder that the Steve Jobs lion will pounce at some point. Similarly, Netflix, which just reported superb Q3 results, broad usage of its streaming feature, an integration with PS3 (and a rumored one with the Wii) is looking more and more like a national cable competitor, leveraging myriad CE devices. Others to be mindful of include YouTube, Hulu and Amazon. These are of course in addition to fierce satellite and telco rivals.

Given all of this, Comcast's smartest move would in fact be to reassign its savviest tech-oriented executive, given him/her a large team and task him/her with ensuring the company's competitiveness in the face of new entrants. In particular, gaming how to compete with Apple should be near the top of the list. Apple has shown an uncanny ability to reinvent markets with its easy-to-use, ultracool devices. While gaining access to cable programming is far from a slam-dunk, Apple's ability to innovate is unmatched, potentially making it a totally new kind of cable competitor.

Last week, coming out of the CTAM Summit, I expressed concern that the cable industry was not fully recognizing online video as a bona fide new medium, which it needs to embrace and capitalize on. For now Excalibur's real agenda is murky; time will tell how aggressive it is.

What do you think? Post a comment now.

Yesterday I moderated the closing general session panel of the CTAM Summit, which included Paul Bascobert (Chief Marketing Officer, Dow Jones & Company), Matt Bond (EVP, Content Acquisition, Comcast), Andy Heller (Vice Chairman, Turner Broadcasting System, Inc.), Jason Kilar (CEO, Hulu), David Preschlack (EVP, Disney and ESPN Networks Affiliate U.S. Sales and Marketing) and Peter Stern (EVP & Chief Strategy Officer, Time Warner Cable). The session offered a prime opportunity to better understand the cable industry's strategy for success in the broadband video era.

In yesterday's post I asserted that the cable industry's main challenge is balancing its desire to preserve its highly successful subscription/ad-supported business model, while meeting consumers' increasing demands for flexibility. At a very high level the two goals are not incompatible; in particular the concept of TV Everywhere could well be a killer app in serving both. Rather, for me, yesterday's session reinforced my concern that the industry is still too focused on the TV platform, and not sufficiently acknowledging consumers' behavioral shifts to online consumption. These are not my sentiments alone; walking the halls of the Colorado Convention Center, various industry participants expressed their concern, in one way or another, that the industry is still not fully in synch with changing times.

On the panel Peter made great points citing data that a very high proportion of online viewing is in the home, and that the amount of time spent viewing online video is still tiny compared to traditional TV viewing. The latter point is one I often make as well, though I believe an equally important point is the remarkable rate at which online video's viewership has grown over the last several years.

On the surface, I agree with Peter's insistence that 80% of the industry's focus should be on improving the TV experience, as that's where consumers primarily watch today, and where the industry has its greatest strength. In fact in yesterday's post, I lamented the industry's underinvestment in VOD as resulting in gaps that competitors are exploiting. These gaps, whether in discoverability, content availability, ease-of-use or monetization desperately need to be closed.

Digging deeper though, a core issue I have with Peter's approach (which is common in the industry btw) is that it doesn't seem to acknowledge that online video is its own medium and should be prioritized as such. Online video is not something that should be thought of as being incorporated into the TV experience. Rather, I believe millions of users see online video as its own medium, with breakthrough benefits such as anywhere access, searchability, sharing, interactivity, personalization and so on.

My conclusion is that the cable industry would be best served by understanding these differences and what they say about consumers' shifting desires and behaviors. Then the industry should aggressively embrace these differences to capitalize on this new medium in ways far beyond just providing the underlying broadband access, as it does today. TV Everywhere, as it is currently conceived, is just a starting point. To be clear, I'm not suggesting the industry should not also be optimizing the TV experience. But rather than devoting 80% of its energies to this, it should be equally balancing its investments so that it is concurrently trying to optimize the online (and mobile) video experience as well.

A point that Paul made seemed right on the money to me: when the WSJ thinks of different platforms, "context is key." Trying to serve their users' needs, given what they want at a particular moment and their physical situation drives the WSJ's product strategy. But note, just as the WSJ's online edition is the poster child for success in paid subscriptions (which the WSJ has now extended to paid mobile applications), it is also celebrating this week its new (and first-time) status as America's most widely-circulated newspaper. The takeaway for the cable industry: you can simultaneously invest and succeed in both new and traditional media, they are not mutually exclusive.

Prior to yesterday's panel, in an acceptance speech for receiving CTAM's 'Grand TAM' annual award, Bob Miron, the chairman of cable operator Advance/Newhouse, correctly acknowledged the rise of freely-available broadband video as a significant new challenge to the cable industry's traditional business model. Based on his 50 years in the business, his prescription for success was to remember the "customer is king." In myriad ways - some overt and some subtle - the cable industry's customers are telling it that broadband video is a new medium they highly value. To succeed in the broadband video era the cable industry must fully acknowledge, embrace and capitalize on this.

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Against a backdrop of rapidly rising broadband video consumption, cable operators and networks are trying to strike a balance between preserving their traditional, and highly profitable business model, while still keeping pace with consumers' desire for more flexible and on-demand viewing options. A nagging question is whether full-length cable programs should be made available online for free, solely supported by advertising (the Hulu model), or if the cable industry's dual subscription/advertising model should be extended online (the TV Everywhere concept).

On the panel, Rebecca likely reflected many cable networks' current thoughts, saying, "We are in an ecosystem with our distribution partners that works....It (the free model) is going to kill all of our business; it's certainly going to kill our ability to produce high quality programming." These sentiments echo concerns I've raised about the viability of ad-supported long-form video. Even as Rebecca was critical of the free model, she noted that Discovery is taking a measured approach to TV Everywhere.

Chief among Rebecca's concerns regarding TV Everywhere is the need to accurately measure online viewership, crucial for ensuring that if viewership were to shift to online, that Discovery's ratings would not be hurt in the process. As Rebecca further pointed out, measurement issues have limited the appeal of cable operators' Video-on-Demand offerings.

Bruce went a step further to suggest that cable operators should learn from VOD's shortcomings when crafting their TV Everywhere plans. Bruce said that VOD rollouts "were led by engineers on a node-by-node basis" when they should have been led by marketers, and that "some operators introduced VOD only with trepidation." He believes that the problems that VOD had in the early days, "are still impacting consumers' perception of the on-demand platform."

Another VOD lesson I would add is that operators must also make TV Everywhere monetizable for their content partners. VOD has suffered significantly from operators not investing in dynamic ad-insertion capabilities, making VOD a marginal opportunity for ad-supported cable networks. A day earlier on another CTAM Summit panel, Steve Burke, Comcast's COO highlighted the fact that Comcast is now generating 300 million VOD sessions/month. But he also noted that Comcast has only just launched a dynamic ad-insertion capability, and in just one of its operations. It continues to bewilder me why Comcast wasn't investing in dynamic ad insertion when it was doing 10 million VOD sessions/month, years ago. How much further along might the VOD platform be, had robust advertising been possible?

As a result, it's fair to wonder whether operators will invest in TV Everywhere sufficiently to make it attractive as a new distribution platform, or alternatively will leave critical components unresolved as they've done with VOD. The answer could well determine whether TV Everywhere is a killer app (as I believe it has the potential to be) or if just becomes a half-baked nice-to-have for consumers and content providers alike. For Comcast at least, thePlatform and other technologies are important building blocks to success. As Ian pointed out, the key is being able to "quickly ascertain" the networks and programs that subscribers should have access to, a challenge that gets more complicated as content available through TV Everywhere-type offerings grows over time.

If cable doesn't get TV Everywhere quite right another implication is that certain gaps in consumers' experiences will persist - gaps that companies like Roku are seeking to fill with video they're bringing into the home solely over broadband connections. Today the $99 Roku device offers users the ability stream Netflix, Amazon and MLB video. It's tempting to see Roku as a potential cable competitor down the road, yet Chuck was quick to clarify that Roku sees itself as augmenting the cable experience, not supplanting it. In fact, he added that Roku is talking to cable operators about how it can partner with Roku to extend their viewer experiences.

Coming away from the session I'm reminded that while broadband is causing significant shifts in consumer behavior and expectations, fully capitalizing on them will take time as business requirements and technologies evolve.

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(Note: Steve Donohue contributed to this post.)