Comcast: On Demand ‘Staggeringly Successful’

Cable Giant Plans Aggressive Content Expansion

By Mike Farrell -- Multichannel News, 5/17/2010 12:01:00 AM

Los Angeles — Comcast chairman and CEO Brian Roberts used the highly public setting of The Cable Show 2010 here last week to launch an aggressive expansion of its video-on-demand offerings, boosting the amount of available titles more than five-fold from about 2,000 to more than 11,000 beginning in two key markets.

Philadelphia and Washington, D.C., will be the first markets to expand, with more to follow. Roberts said the expansion will boost the amount of available on-demand content from 8,500 hours to more than 70,000 hours. He added that the lineup also includes thousands of movies in HD format, calling it a “quantum leap in our capacity.”

Roberts said the VOD expansion is the latest in what has been a long history of On Demand development for Comcast. The Philadelphia-based MSO was a pioneer in free on dedmand and has been aggressive in its launches and enhancements to the product. He added that the product is also a hit with customers — on demand views have grown from 200 million in 2003 to more than 14 billion in 2009 and are expected to surpass 15 billion this year.

“On Demand has been staggeringly successful,” Roberts said.

And it’s only expected to get better. Comcast is part of a group of cable operators that have teamed with movie studios like Warner Bros. to release more day-and-date movie titles. Roberts said that for Comcast, day-and-date releases have grown from about 13 in 2007 to more than 100 in 2009. So far this year, Comcast has offered about 60 day-and-date titles on demand.

“It’s clearly a driver of behavior,” Roberts said.

At the opening general session last Tuesday, Warner Bros. Home Entertainment Group president Kevin Tsujihara agreed that the day-and-date experiment has been a success and pointed to a $30 million joint advertising campaign with several cable operators to drive viewership. As a direct result of that campaign, Tsujihara said, buy-rates for VOD movies have jumped 35% this year, on top of a 25% increase in 2009.

“We are finally seeing the numbers [grow] around buy rates,” Tsujihara said. “This is a profitable contributor.”

Comcast stands to gain control of a huge amount of additional content once its NBC Universal joint venture passes regulatory muster, expected later this year. Roberts said he expects the distinctly different cultures of the two companies to be maintained.

“We are not going to try to ‘Comcastize’ NBC Universal,” Roberts said. “We don’t have a ‘Comcast way,’ so to speak.”

Comcast announced in December its plans for a joint venture with General Electric Co., whereby the Philadelphia-based MSO would end up with 51% control of NBCU, which comprises the NBC broadcast network, 26 television stations, and cable channels including USA Network, Bravo and Syfy.

The NBCU venture, valued at about $30 billion, would make Comcast the premier content provider, as well as the largest cable operator in the country. Roberts said he believes that with NBCU, Comcast will continue to play a role in shaping the industry. But he said people should not expect the joint venture to break new ground, especially on the retransmissionconsent or programming-cost fronts.

Many in the industry had hoped Comcast would bring some moderation to the retransmission consent debate, which has heated up as broadcasters battle for higher and higher fees. At the same time, many cable operators complain that high programming rates from cable networks make it difficult to maintain reasonable overall charges.

Roberts said he believes programming cost disputes eventually will get resolved and that the latest debate will find its own “water level.”

“We didn’t build into this deal any expectations to our investors or to the employees that we’re going to try to go out and lead the way here, to take it to some place where nobody has ever been.”

But Roberts made it clear that no one in the industry should expect retrans fees to go away. “Retrans fees are going to get paid,” Roberts said. “Can we play a role in helping to establish a model so that not all of the best programming gets siphoned off broadcast and put on cable? I hope so.”

Roberts said the industry is working together with broadcasters to make what have been tense negotiations easier for consumers.

“These are all healthy conversations,” Roberts said, adding that, at the end of the day, “broadcasters are going to have another revenue stream. That is probably a good trend for NBC.”

Roberts also appeared buoyed by the recent rebound of the broadcast advertising market, especially for local television stations. Comcast will gain control of about 10 NBC ownedand- operated stations and 16 Telemundo O&Os once the NBC deal is approved.

“Two quarters does not make a trend, but in the past two quarters, local has come way up,” Roberts said. “I feel better about the decision to do NBCU today than I did five months ago.”