Cable firm Comcast seems ready to embrace video over the Internet -- like it or not.
The move poses a dilemma for the nation's biggest cable TV firm.
Why? Comcast (NasdaqNM:CMCSA - News) makes most of its money selling pay TV. But much of its growth depends on signing up more broadband Internet customers. And its data strategy has been clear: increase speeds rather than cut prices.
The rub is that faster connections let consumers get more video over the Internet. If people ogle online content on PC screens, they're probably not watching cable TV -- Comcast's main revenue source.
The company Thursday disappointed investors by reporting third-quarter profit of 10 cents a share, flat with the year-ago figure and 4 cents less than analysts expected. Its stock that day fell 5%. But while total revenue rose just 9% to $5.6 billion, its broadband services revenue soared more than 26% to $1 billion on a 24% jump in subscribers.
"The broadband pipe is an asset. Comcast must determine how to extract maximum value from it," said Jonathan Hurd, an analyst at consulting firm Adventis. "Otherwise, competitors such as Disney, Google, Yahoo and the telcos will introduce disruptive video distribution models that erode traditional cable revenue streams."
Many Competitors
Google (NasdaqNM:GOOG - News), Yahoo (NasdaqNM:YHOO - News), Time Warner's (NYSE:TWX - News) America Online, Walt Disney (NYSE
IS - News) and others are angling to deliver video on demand to consumers via Web sites. Consumers need speedy broadband hookups to get that video content.
"If broadband growth in this country can continue to grow because of video (over the Internet), Comcast is going to be a big winner, and we're going to try to make that happen," Comcast Chief Executive Brian Roberts told analysts in Thursday's earnings conference call.
The entertainment world is changing, analysts say. Consumers want to watch whatever they want, whenever they want.
Comcast now leases digital video recorders to TV subscribers so users can record shows and watch them whenever they want.
Comcast also offers free video-on-demand content, including 800 movies and kid and sports shows.
Video-on-demand and DVR services might keep Comcast's couch-potato TV customers happy. It has 21.4 million video subscribers.
Still, studies show some consumers definitely want to download video, along with other content, from the Web. Those consumers are likely to use Google, Yahoo, AOL and other Internet search engines to find what they want.
Roberts last week said TV and PC users will access different types of video. "Some would call it the lean-forward experience, vs. the television lean-back," he said.
Comcast might have no choice but to increase broadband speeds, even if it opens up Internet video. Though cable modems have had a speed edge over the DSL broadband provided by phone companies, that's about to change.
Local Bell Verizon Communications (NYSE:VZ - News) says its faster service, called FiOS, will be available to 3 million homes by year's end and 6 million by late 2006.
The FiOS service offers data speeds of 5 megabits per second, 15 mbps and 30 mbps. The 15 mbps product cost $45 a month.
Comcast currently offers Internet download speeds up to 8 mbps. Many analysts forecast that it will double Internet speeds to 16 mbps over the next year or so.
The real battle, though, might be over online content. Yahoo is developing a broadband portal for Verizon's FiOS service. It should be ready by year's end, Verizon says.
Also, Yahoo has been reshaping its own Internet portal to offer more original video content. Its chief executive, Terry Semel, spent 24 years at Warner Bros.
Comcast Owns Content
Comcast has its own entertainment guru. Its president, Steve Burke, formerly headed ABC Broadcasting while at Disney.
Comcast owns sports teams and cable channels, like E Entertainment. Owning more content would give Comcast more flexibility.
In early 2003, Comcast tried to buy Disney, which rebuffed its takeover bid.
Viacom's (NYSE:VIA - News) plan to split into two companies could give Comcast another chance to gobble up entertainment assets, some analysts say. Its holdings include CBS, MTV and Nickelodeon. Viacom's breakup should be completed this year.
Observers say Comcast recently mulled a move to beef up its online offerings. Comcast.net, its broadband portal, offers Internet customers an array of online music, games and sports content.
Reports claim that Comcast and Google together and, separately, Yahoo and Microsoft (NasdaqNM:MSFT - News) have been in talks to acquire a stake in Time Warner's AOL.
Comcast would benefit by offerings its Internet customers AOL's online content, including video. Comcast has declined to comment.
Comcast's shares, though, have been falling, giving it less currency to make an acquisition. Its stock has dropped 22% in 2005 to about 27.
http://news.yahoo.com/s/ibd/20051105/bs_ibd_ibd/2005114tech
The move poses a dilemma for the nation's biggest cable TV firm.
Why? Comcast (NasdaqNM:CMCSA - News) makes most of its money selling pay TV. But much of its growth depends on signing up more broadband Internet customers. And its data strategy has been clear: increase speeds rather than cut prices.
The rub is that faster connections let consumers get more video over the Internet. If people ogle online content on PC screens, they're probably not watching cable TV -- Comcast's main revenue source.
The company Thursday disappointed investors by reporting third-quarter profit of 10 cents a share, flat with the year-ago figure and 4 cents less than analysts expected. Its stock that day fell 5%. But while total revenue rose just 9% to $5.6 billion, its broadband services revenue soared more than 26% to $1 billion on a 24% jump in subscribers.
"The broadband pipe is an asset. Comcast must determine how to extract maximum value from it," said Jonathan Hurd, an analyst at consulting firm Adventis. "Otherwise, competitors such as Disney, Google, Yahoo and the telcos will introduce disruptive video distribution models that erode traditional cable revenue streams."
Many Competitors
Google (NasdaqNM:GOOG - News), Yahoo (NasdaqNM:YHOO - News), Time Warner's (NYSE:TWX - News) America Online, Walt Disney (NYSE
IS - News) and others are angling to deliver video on demand to consumers via Web sites. Consumers need speedy broadband hookups to get that video content."If broadband growth in this country can continue to grow because of video (over the Internet), Comcast is going to be a big winner, and we're going to try to make that happen," Comcast Chief Executive Brian Roberts told analysts in Thursday's earnings conference call.
The entertainment world is changing, analysts say. Consumers want to watch whatever they want, whenever they want.
Comcast now leases digital video recorders to TV subscribers so users can record shows and watch them whenever they want.
Comcast also offers free video-on-demand content, including 800 movies and kid and sports shows.
Video-on-demand and DVR services might keep Comcast's couch-potato TV customers happy. It has 21.4 million video subscribers.
Still, studies show some consumers definitely want to download video, along with other content, from the Web. Those consumers are likely to use Google, Yahoo, AOL and other Internet search engines to find what they want.
Roberts last week said TV and PC users will access different types of video. "Some would call it the lean-forward experience, vs. the television lean-back," he said.
Comcast might have no choice but to increase broadband speeds, even if it opens up Internet video. Though cable modems have had a speed edge over the DSL broadband provided by phone companies, that's about to change.
Local Bell Verizon Communications (NYSE:VZ - News) says its faster service, called FiOS, will be available to 3 million homes by year's end and 6 million by late 2006.
The FiOS service offers data speeds of 5 megabits per second, 15 mbps and 30 mbps. The 15 mbps product cost $45 a month.
Comcast currently offers Internet download speeds up to 8 mbps. Many analysts forecast that it will double Internet speeds to 16 mbps over the next year or so.
The real battle, though, might be over online content. Yahoo is developing a broadband portal for Verizon's FiOS service. It should be ready by year's end, Verizon says.
Also, Yahoo has been reshaping its own Internet portal to offer more original video content. Its chief executive, Terry Semel, spent 24 years at Warner Bros.
Comcast Owns Content
Comcast has its own entertainment guru. Its president, Steve Burke, formerly headed ABC Broadcasting while at Disney.
Comcast owns sports teams and cable channels, like E Entertainment. Owning more content would give Comcast more flexibility.
In early 2003, Comcast tried to buy Disney, which rebuffed its takeover bid.
Viacom's (NYSE:VIA - News) plan to split into two companies could give Comcast another chance to gobble up entertainment assets, some analysts say. Its holdings include CBS, MTV and Nickelodeon. Viacom's breakup should be completed this year.
Observers say Comcast recently mulled a move to beef up its online offerings. Comcast.net, its broadband portal, offers Internet customers an array of online music, games and sports content.
Reports claim that Comcast and Google together and, separately, Yahoo and Microsoft (NasdaqNM:MSFT - News) have been in talks to acquire a stake in Time Warner's AOL.
Comcast would benefit by offerings its Internet customers AOL's online content, including video. Comcast has declined to comment.
Comcast's shares, though, have been falling, giving it less currency to make an acquisition. Its stock has dropped 22% in 2005 to about 27.
http://news.yahoo.com/s/ibd/20051105/bs_ibd_ibd/2005114tech
