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Rumor: Comcast Plots OTT Stealth Attack

Comcast Corp. (Nasdaq: CMCSA, CMCSK) is considering an over-the-top Internet video play that would bring its services into other cable territories, according to one source with ties to the cable industry.

The plan is likely predicated on the NBC Universal merger going through, because that would give Comcast the content to interest consumers outside its territory. (See Comcast to Take Control of NBC Universal and Web TV Takes a Crack at Comcast-NBCU Union .)

It would work like this: Comcast would provide a small box that receives content via the Internet and displays it on the TV. This would let Comcast provide over-the-top TV service in areas such as Los Angeles, which is covered in part by Time Warner Cable Inc. (NYSE: TWC). The key, though, is owning the content to make it work; otherwise, who's going to bother to install that box?

The box doesn't exist yet, but the source says potential vendors are already working on it, at least on the software side.

Even if Comcast's plan doesn't come to fruition, our source is convinced one of the other operators that have corporate ties to content or own it outright -- such as TWC or Cablevision Systems Corp. (NYSE: CVC) -- will try it. They certainly must be aware of the possibility.

— Craig Matsumoto, West Coast Editor, Light Reading

Jeff Baumgartner 12/5/2012 | 4:29:50 PM
re: Rumor: Comcast Plots OTT Stealth Attack

The notion that Comcast was looking at OTT was a possible byproduct of the "Excalibur" project that bubbled up last year, but Comcast, at the time...before it made a move for NBCU, talked about it being tied to some sort of a common provisioning and management  under a new division called Comcast Converged Products, which is obviously benign when compared to a possible OTT play.


But with Netflix cramping cable's style and a new AppleTV product reportedly on the way, going OTT with a subscription package of some sort (would the purported Comcast idea be all on-demand or would linear factor in?) might give an MSO like Comcast a way to defend against those guys but also offer some growth opportunities. 


Comcast is already going OTT in a sense with the free version of Fancast, but was interested to read here that they might also be interested in having an out of market broadband  box made that can feed the OTT offering to TVs.


The implication fo that would be explosive, of course, since cable is pretty clubby. Having MSOs go OTT would turn them into competitors, so that would certainly put some strain into those relationships. Unless your a tier 2/tier 3, maybe. Steve Donohue asked some of those folks what they'd think about Comcast going OTT on them, and they strangely seemed to be all for being treated as a dumb pipe.


The rumor mill says there's software being developed for this, but what about the hardware?  There's plenty of companies out there that can help out. In fact, Boxee's already suggested at a relatively recent conference that cable should go OTT.


Anyway, will be interesting to find out if/when this might occur... sounds simple on the surface, but the implications of such a decision will run deep. JB

 

David Dines 12/5/2012 | 4:29:50 PM
re: Rumor: Comcast Plots OTT Stealth Attack

On one hand, I am impressed that Comcast might be (it is a rumor after all) proactively pursuing this new technology/market/business model.  The company is smart to see that OTT is a very likely threat to its core business (much like Internet news sites have disrupted newspapers and magazines).   


On the other hand, I am not convinced that Comcast will fully embrace OTT due to fears that it could cannibalize their highly profitable core business (much like the way telcos treated VoIP services).  Also, it is unclear how it will treat NBCU assets.  If it tries to limit distribution to competing MSOs or outlets, there could be a regulatory and/or consumer backlash.  


On a practical basis, charging for the box will likely not be very popular with consumers, and giving it away free will make it difficult to turn a profit.  Plus, I expect a rapid adoption of Internet ready Blu-Ray players, home theater and TV systems (Blu-Ray players with Internet are already available for around $100), which begs the question why would a consumer want to buy yet another box to put next to their widescreen.


I guess time will tell if the rumor is true, and if so how well they execute.

Pete Baldwin 12/5/2012 | 4:29:49 PM
re: Rumor: Comcast Plots OTT Stealth Attack

I think we may be talking about different things here.


In your Sling example, you still need a cable or satellite subscription in order to have anything to 'sling' to a PC.


What we're talking about (or at least, my interpretation of it) is a box that could *replace* your cable or satellite subscription.  Something that's the source of the content you receive, not just a place-shifter.

comtech3 12/5/2012 | 4:29:49 PM
re: Rumor: Comcast Plots OTT Stealth Attack

I don't know if you're aware of this,but the Sling Box can do this.With a Sling Box,you connect it to a router and open a port on it.The box can then be connect to a set-top box,such that from Directv or cable provider,and also free to air via an antenna.The Sling Box allow you to watch TV programs any part of the world where it is hooked up,and view it from another location.

comtech3 12/5/2012 | 4:29:49 PM
re: Rumor: Comcast Plots OTT Stealth Attack

I don't know if you're aware of this,but the Sling Box can do this.With a Sling Box,you connect it to a router and open a port on it.The box can then be connect to a set-top box,such that from Directv or cable provider,and also free to air via an antenna.The Sling Box allow you to watch TV programs any part of the world where it is hooked up,and view it from another location.

miar70 12/5/2012 | 4:29:33 PM
re: Rumor: Comcast Plots OTT Stealth Attack

I tend to agree with JB and comtech at the same time. I think that Comcast competing OTT with other MSOs in their backyard is highly unlikely. However a box that supports the 'TV Everywhere' model such that you can take it with you and just plug it in and have access to everything you have subscribed to at home would be useful for all MSOs and would not erode subscription revenue either, in fact it would make it more sticky.


It would not have to be a 'real' sling box taking and adapting content directly from the STB, because with a MSO service offering this is a very inefficient way to deliver it, just hook them up directly to the Xfinity platform and the job is done...

paolo.franzoi 12/5/2012 | 4:29:32 PM
re: Rumor: Comcast Plots OTT Stealth Attack

Doesn't NBC call its OTT product Hulu?


Box to connect Internet to the TV called a PC?


seven


 

miar70 12/5/2012 | 4:29:32 PM
re: Rumor: Comcast Plots OTT Stealth Attack

Yes they do and revenue (mainly from ads) has not been great, hence the Hulu plus subscription service recently announced. So what is the difference between Xfinity and Hulu+ ?


Hulu spent considerable effort blocking Boxee and other devices from displaying their content on TVs and it seems that most people don't enjoy having a full blown PC sat next to their TV, so that model is not aimed at the mass market. Hulu+ opens up to lots of other devices (iOS, xbox360 & PS3 to follow), which reverse that trend, but for a fee.


So do you pay you $10/month extra to Hulu or Xfinity? For Comcast customers, Xfinity seems to make sense for non-Comcast customers maybe Hulu+ is a better fit. Either way the money ends up back with NBC (and other content partners).


The only interesting part is whether you can cut the cord on your cable/sat subscription and survive off the $10/month OTT service. If they figure out that you can, then you can expect the price of the OTT service to climb to recoup lost revenue in other segments...

Cooper10 12/5/2012 | 4:29:31 PM
re: Rumor: Comcast Plots OTT Stealth Attack

Once an infrastructure for IP distribution of content is in place (i.e. Hulu, xfinity, or others) then offering that content in an "OTT" model is viable.  That said, keep in mind that the strong emphasis of the terrestrial service providers (cable, telco) is to provide a "Triple Play" of video, voice, and data, so an OTT video offering isn't overly compelling - likely a low margin business relative to the current model, with a decent amount of billing/service/support issues that would have to be addressed.


Cable has a huge opportunity in serving the HHs they ALREADY pass with physical infrastructure but don't subscribe to their services - most cable MSOs have video penetration to homes passed in the 50% to 60% range, so a more likely play would be to go after non-video households to provide a (typically) superior data product, with an IP video overlay that the consumer could use to supplement (or more rarely replace) a DBS subscription in the house. 

paolo.franzoi 12/5/2012 | 4:29:29 PM
re: Rumor: Comcast Plots OTT Stealth Attack

Okay, the reason I brought up Hulu and it seems to have blown past people is that:


1 - Unlike Xfinity, Hulu is providing access to NBCU content.  This content is available OTT over all of the Comcast competitors.  Not greatly stealthy about it either.


2 - This brings up one of the reasons that proprietary content has not meshed well with distribution in the past.  From a content perspective, the way to make it valuable is to get it widely distributed.  This completely defeats the vertical idea except from a cost standpoint.  Of course eliminating the profit that NBCU gets from Comcast, just lowers the value of NBCU.


3 - I was being a bit humorous about the PC to stream to the TV, but not greatly so.  There are plenty of streaming OTT video solutions today.


seven

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