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Comcast CFO: We Have the Ingredients to Compete With Netflix

15 Sep, 2010 By: Erik Gruenwedel

Netflix’s lone stake in the nascent streaming market of Hollywood movies and television programs is about to get a major competitor: No. 1 cable operator Comcast Corp.

Speaking Sept. 15 at the Bank America Merrill Lynch media conference in Newport Beach, Calif., Comcast CFO Michael Angelakis said the company’s broadband-based Xfinity platform, which allows subscribers to access content on cable video-on-demand (VOD) and the Internet, is designed to also offer streaming.

In June, Comcast bowed Xfinity service in Colorado featuring more than 100 HD channels, 50 foreign-language channels, 20,000 VOD choices and faster Internet speeds. Comcast High-Speed Internet and Comcast Digital Voice are also being transitioned to the platform.

Netflix, which has cited streaming as a catalyst for ongoing subscriber growth of its online DVD/Blu-ray Disc rental service, said more than 60% of its members stream at least 15 minutes of content per month. Netflix includes streaming as a value-add to monthly packaged media subscriptions.

“I think we have all the ingredients to compete effectively with the Netflix offering,” Angelakis said. “It boils down to us taking those ingredients and executing better with a specific plan.”

The CFO said most Netflix subscribers also have cable or broadband service, including many with Comcast.

“We don’t have our head in the sand regarding that,” Angelakis said.

Separately, the CFO said transactional VOD is becoming a significant part of Comcast’s “complimentary” on-demand service, including generating about $1 billion in annual revenue, compared with $500 million five years ago.

Angelakis said Comcast was able to offer about 13 transactional VOD movies day-and-date with DVD a few years ago — a tally he said now exceeds 100 titles. With Comcast's majority purchase of NBC Universal pending regulatory approval, the cable operator's VOD slate could grow significantly.

Indeed, Comcast has spearheaded studio efforts aimed at establishing a virtual video store that can capture greater margins from transactional VOD than available to studios through conventional store-based packaged media rentals.

“That trend has more monetization to it,” Angelakis said.

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