Comcast: Net TV Plan Supports Cable

Comcast's Internet TV plans are designed to protect cable's economic model by reinforcing the value of paying for video content, said Karin Gilford, Comcast Interactive Media's senior vice president of Fancast and online entertainment.

Gilford said the service Comcast plans to deliver this year — called On-Demand Online — will allow cable TV subscribers to log on to a site like Fancast to watch cable programming online.

“We want to bring a lot of content that is not online right now, while still preserving the economic model for the industry,” she said.

Gilford spoke at a panel discussion on broadband-video distribution here last Tuesday moderated by Will Richmond, editor and publisher of VideoNuze, and presented in association with the National Association of Television Program Executives.

In recent months Comcast, Time Warner Cable and Cox Communications have been looking to secure distribution agreements to provide an expanded lineup of video content online from programmers including NBC Universal, Viacom's MTV Networks, Turner Broadcasting System, Discovery Communications and Scripps Networks (see “Web TV Plans Percolate,” Feb. 23, 2009, page 2).

Today, cable, satellite and telco TV providers pay an estimated $22 billion per year in programming fees, Gilford noted. “It's pretty hard to imagine that revenue stream going away,” she said.

Asked about “cord-cutting” — the notion that cable customers would cancel their pay-TV service and obtain all their video content online — Gilford said that remains a theoretical idea rather than a real trend.

“It's something people are talking about, but it's not actually happening right now,” said Gilford, formerly vice president and general manager of Yahoo Entertainment.

Comcast's On-Demand Online service will be another carrot to convince customers they shouldn't cut the cord, she said. “There's fantastic programming available from premium channels and basic-cable channels, and showing subscribers they can watch some of this great content online just by logging in will relieve that pressure,” Gilford said.

For MTV Networks, online video as a business is profitable, said Greg Clayman, executive vice president of digital distribution and business development — but “the bad news is it's still a small one, certainly relative to the rest of our business.”

“The question is, How do you grow it?” said Clayman, who also spoke on the panel. “The hope is that we're not just replacing one with the other but that we're able to grow the overall pie.” is profitable on a gross-margin basis, which means every episode streamed from the site generates a profit, according to Disney-ABC Television Group executive vice president of digital media Albert Cheng.

“It took us a while to do that … but it's been really a good business,” he said.

Compared with broadcast, however, Cheng said “we have a way to go” in terms of getting to the point at which ABC is generating the same amount of profit on each episode no matter where it's viewed. “As successful as we are with, most people still watch TV,” he said.

The tradeoff is not the proverbial “analog dollars for digital pennies,” Cheng added. The difference between Internet video and TV is more like comparing “a teenager to a full-grown adult.”

YouTube routinely serves more than 40% of video streams viewed on the Internet, Richmond noted. In a question directed to Gilford, he asked, “Is there anything about YouTube's dominance of the online video space that gives Comcast pause?”

Gilford replied that Fancast, which is intended to cater to avid TV and movie fans, is a completely different animal from YouTube.

“You can't ignore the reach and the number of streams on YouTube,” she said. “But I don't really think the YouTube brand is a premium-content brand … We really want to be top-of-mind for television fan.”