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Comcast to Bow Online VOD

23 Feb, 2009 By: Erik Gruenwedel

Comcast Corp. Feb. 23 said it would bow a Web-based video-on-demand (VOD) service by the end of the year.

The Philadelphia-based largest cable provider in the United States would brand the service — a work-in-process dubbed internally OnDemand Online — featuring new content from the other cable networks, including HBO, Discovery Channel and Showtime.

Specific licensing deals, technological issues and business model are still being discussed, according to spokesperson Jennifer Khoury.

“We think online on-demand is an opportunity to give customers access to videos currently not offered on the Web,” she said.

Comcast currently offers cable VOD of major movies the same day as the DVD release.

Separately, Time Warner Cable is exploring similar options aimed at retaining subscribers during the current recession. All the major cable providers have reported declines in the number of subscribers and purchases of premium content.

Indeed, Charter Communications, the cable provider founded by Microsoft co-founder Paul Allen, recently filed for bankruptcy protection citing downturns in the economy.

The moves come as digital distribution of TV shows and movies online is considered an attractive incremental revenue alternative for content holders in the face of declining network ad sales, cable subs and DVD sales.

As a result, select Web-based VOD services are aggressively marketing themselves to niche and general audiences.

CBS Corp. said it would offer same-day online streams of college basketball’s annual “March Madness” for the first time in high definition. Last year’s tournament generated $24 million in ad-revenue for CBS.com.

Hulu.com, the co-founded streaming site from NBC Universal and News Corp., parent of 20th Century Fox Studios, last week began restricting its content (citing license agreements) to select third-party sites, notably Boxee.com and CBS-owned TV.com.

Boxee offers free software for Apple computers, including Apple TV, which the owners of Hulu likely didn’t appreciate, said Phil Leigh, analyst with InsideDigitalMedia.com.

He said that with increased connectivity between the TV and computer, Hulu, in effect, was abetting its competition with free content earmarked for an HDTV — a destination Leigh said News Corp. and NBC Universal have no desire to visit at the moment.

“[Boxee permitted] Apple TV users to get Internet video at many sites instead of merely iTunes and watch them on the TV,” he said. “Consumers will discover that laptops and flat-panel TVs have common connections.”

Hulu, which has been subject of a high-profile TV marketing campaign this year, including a Super Bowl ad featuring Alec Baldwin, is aggressively repurposing network content just minutes after its prime time broadcasts. It also has about 100 movies.

“I think the market is coming around to the idea that the value and margins for this new streaming market will reside with those that control the customer,” said independent analyst Rob Enderle. “The entity that provides the most cost-effective service can influence [the market] and get the revenue. Hulu wants to be that entity.”

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