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Comcast: On Demand ‘Staggeringly Successful’

5/18/2010 11:10 AM Eastern

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.”

 

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