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Wednesday, September 29, 2004 - Page updated at 12:00 A.M.
Comcast arms for TV revolution
By Kim Peterson
Comcast, the nation's largest cable company, has a keen interest in the Puget Sound region. Two of its business partners, Microsoft and RealNetworks, are based here, and the company is the primary cable-television provider in the area.
Comcast Chief Executive Brian Roberts and Chief Operating Officer Stephen Burke are here this week, talking to Microsoft about new software for cable boxes and meeting with some of Comcast's 2,700 local employees. Roberts spoke yesterday at the annual meeting of the Greater Seattle Chamber of Commerce.
The Philadelphia-based company has 1.1 million cable subscribers and 400,000 high-speed Internet customers in the state; it says Washington customers are among the most receptive to its new products and emerging technologies.
By the end of the year, Seattle will be the first city in which Comcast plans to roll out new set-top boxes featuring digital video recorders and Microsoft's program guide.
Roberts and Burke sat down with The Seattle Times yesterday to talk about Microsoft, video-on-demand and the future of cable television. Here are some excerpts from the conversation:
Q. Explain your video-on-demand strategy. You've said that 90 percent of that content should be at no additional cost to the consumer.
Roberts: Customers want to drive the car; they want to be in control of the remote and not have to live with the linear schedule. We call that the personalization of television that what has happened on the Internet is now going to happen on television and on-demand is a big part of that strategy.
Today, we have about 2,000 hours of programming, and most of that is no additional cost.
Q. How many hours of programming do you want to have?
Roberts: The goal is that five years from now it's virtually unlimited, using the great progress of Moore's law, where the servers get cheaper and capacity gets greater. You'll have 30,000 to 40,000 hours someday. We're really building a whole new cable system inside the cable system in the on-demand world.
Q. How does search technology play into that?
Burke: That's actually why we're here in Seattle.
You just say, "John Wayne movies," and we have a demo of this where up comes every John Wayne movie that's on now or in the future.
Q. How did search bring you to Seattle?
Burke: We spent about three hours yesterday with people from Microsoft looking at their new [television] guide, called Microsoft Foundation. We're testing in Seattle and if you think about it, if you have 10,000 or 20,000 hours of video-on-demand, you need to have a very elegant user interface that allows you to pick what show you want.
Microsoft is working very hard on making their new Foundation Guide a guide that we can roll out more broadly. If all goes well, our plan is to roll out the Microsoft guide across the Seattle market by the end of this year.
Roberts: We're quite committed to working to see if Microsoft's product can really evolve to become the best navigation system working with Comcast.
Burke: The Seattle market is one of our best markets for new products. So we're going to roll out a lot of things here first.
Q. What are some of the future products you're looking at?
Roberts: This is a competitive business, so we need to be a new products company. You can rely on the fact that the state of the art is what you're going to get with Comcast. We spent $38 billion from 1996 to today modernizing the cable systems that are today Comcast. That's an incredible investment. And now for the next 20 years, we think every product imaginable that has gone digital is going to be available over the broadband network.
Q. Comcast made an unsuccessful bid for Walt Disney earlier this year. What are the chances that you may go after Disney again?
Roberts: We've moved on, and we're very excited with where we're at. Next.
Q. Video-on-demand has suffered from being in a later window of availability for movies than theaters and rental stores. How do you see this changing?
Burke: I think when people think of video-on-demand they think of movies, and movies not being available at the same time as they're available at Blockbuster. But 90 percent of the usage of our video-on-demand product is not movies that you pay for. It's things like National Football League and A&E on demand.
We look at on-demand as being a way to watch whatever you want whenever you want to watch it, and a piece of that is movies, but a big piece of that is sports and news and kids entertainment.
Roberts: There have been many great new platforms developed that aren't dependent on any one piece of content to make you excited about it. So yes, it would be nice, and we are working on it, but there are legitimate economic issues that have to be sorted out.
Q. After the recent agreement with Sony [in which Comcast will offer Sony movies and other content on its video-on-demand platform], do you anticipate going to other studios and trying to develop something similar?
Roberts: We've been talking to other studios, and they're calling us quite excitedly. I think this is the old chicken-and-egg problem when you get to a new platform. One major television head, when Steve and I went to visit, we described the on-demand world and said, "We really want all your content on demand."
He jokingly said, "Well I'm going to put my head on my desk and close my eyes. When I wake up I hope you guys are gone." That's how it always begins. Now that company is one of our biggest on-demand partners. But it's not enough. We don't have the richness yet. But we will.
Q. It doesn't seem like cable has been a priority for Hollywood.
Roberts: The music industry, I think, is a good case study. If the consumer can't get what they want when they want it, then in this world where it's getting easier and easier to get things illegally, if you don't offer it to them legally, then you've got problems.
A lot of studios actually do want it. They get it, and they know that the viewer-controlled experience is part of the future and they want to make sure it's legal. We want to make sure we're in the middle of that conversation.
Q. With a nationwide rollout of personal video recorders, plus this growing on-demand library, it seems that television as we know it could change.
Burke: In some ways, we're right where the world was when the Internet really took off. You can see it; it's starting to accelerate. It's not impossible five years from now that 50 percent of the homes in America will have a personal video recorder, which sounds like a huge number. And then if half the homes have video on demand, you can imagine half the viewing in America being time-shifted, which is a huge change.
Roberts: (Stephen Burke's) dad ran ABC. My dad got into cable in 1962, and here we are sitting here today, the two of us can say we think it's going to change more in the next five years than any time in the 40 years that our dads were working in television. Computers and television are converging.
Q. Adelphia Communications may be up for sale. Your thoughts on buying some of the company's assets?
Roberts: We did confirm that we and Time Warner are preliminarily looking at whether there's a way to buy it together and get some systems that fit their profile and fit ours. We'll just have to see how it goes. It's not something where there's new news coming for a while. We're just at the beginning of the auction process.
Kim Peterson: 206-464-2360 or email@example.com
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