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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

November 28, 2011 at 10:08 AM

Comcast’s new moves, beyond the box

Cable giant Comcast is getting offensive, and I’m not just talking about rates.

As Americans surround themselves with video screens that stream movies and TV shows from different websites, Comcast is going after the challengers.

Comcast had to do something. It can no longer rely on the near monopoly provided by government franchises and content-licensing deals to hold on to its cable TV customers.

So the Philadelphia-based company is giving itself a makeover, in the style of Hulu, Netflix, iTunes and other popular digital-video portals.

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Over the past year, Comcast has rolled out new hardware, Web services and mobile applications that extend its video content well beyond the TV and set-top box.

It looks like the company is trying to stem the tide of “cord cutters” who are turning to broadcast and Web video, but managers behind the new initiatives denied that’s the case.

“I would say the reason we’re doing a lot of this stuff is because our audience is moving to different devices,” Tom Blaxland, senior director of product management, said during a recent media tour highlighting the new services.

Blaxland (below) manages a Comcast team in Philadelphia that’s building new Web interfaces and mobile apps.

“We just keep following that thread of where our customers are going, so we can give them tools they appreciate,” he said.

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It may be working. Earlier this month, Comcast announced it’s losing fewer cable TV subscribers this year — 443,000 through the nine months ending Sept. 30, compared with 622,000 lost during the same period last year.

Comcast’s big growth area remains broadband Internet service. Content and video services add value to the broadband business, and prevent the company from becoming a simple utility.

Customers benefit because the rise of Web alternatives is pressuring Comcast to provide new and improved services to subscribers, but it hasn’t gone so far as to lower rates. Instead it’s offering more ways to consume content you’re paying for already.

With nearly 4 million users, Comcast’s video-streaming apps are hits. But that’s still only a small portion of the 20 million digital TV subscribers who could get their content on mobile devices through the free apps.

About 8 million people are using Comcast’s video site, XfinityTV.com. That includes 5.5 million subscribers and 2.5 million others who use the site to stream free broadcast content.

One goal of the site is to provide a unified console for TV shows and movies available via Comcast. Listings show what can be recorded to a DVR, streamed over the Internet or played from Comcast’s “On Demand” collection.

Blaxland said this content may be available from various other websites, but it can get complicated for avid viewers to bookmark and track dozens of sites to get their shows online.

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For a while, Microsoft was heading in this direction with its Windows Media Center video guide, which can blend cable, broadcast and online video sources. But the company now emphasizes the Xbox for video consumption.

Comcast also is developing a new app that will stream live TV shows to Web tablets in subscribers’ homes, matching a capability offered by other cable companies. Comcast announced the live TV streaming in January and disclosed last summer that it will use a Motorola device that connects to home routers and handles the streaming. Reports last week said the service will enter testing in a few weeks and initially work only with iPads and Motorola Xoom tablets.

Comcast also is preparing to release a new cable box that plays cable TV, Web video content and some Web apps. Dubbed “Xcalibur,” the set-top box is being tested in Georgia, with plans to roll it out across the country starting next year.

Tying these apps and products together is a new interface design dominated by thumbnail “cover shots” of movies and TV shows. It looks more like iTunes or Netflix than the traditional Comcast menu. The interface was added to the XfinityTV.com site in October and is used on the new Xcalibur box.

Elements of the interface will also appear on the new Comcast app coming this month to the Xbox 360, Blaxland said. Comcast subscribers will be able to stream stored — but not live — video content to the consoles, after Microsoft rolls out a new software dashboard for the consoles Dec. 6.

Some of these changes reflect what’s happening behind the scenes. Comcast is now streaming content over the Internet from a central hub in Denver, which could eventually replace the local “hubs” that Comcast uses to store and distribute video over its traditional cable.

Meanwhile, the company is using both cable and Web systems. That’s why subscribers will see some shows available “On Demand” — from Comcast’s regional hubs — and others available for Web streaming. Different licensing deals affect what’s available from the two systems.

You’d think Comcast would be able to abandon regional hubs and just stream everything via the Internet, as Netflix or Hulu does. That would eliminate the need for set-top boxes, and let customers stream live and on-demand content straight to connected TVs, tablets and game consoles.

Blaxland said “you could foresee that being the case” but for now the cable system still works well for distributing high-quality video.

“Eventually the IP (Internet protocol) stuff will catch up so that we can do some pretty cool stuff,” he said.

Having one central hub could also lower Comcast’s operating costs dramatically.

So does that mean subscriber rates will come down? Not likely.

“There’s no way you can speculate on that,” spokesman Steve Kipp said, explaining that content costs will keep going up even if distribution costs fall: “Those rates keep going up year after year, especially sports.”

Comments | Topics: Broadband, Comcast, digital cable

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