Comcast and NBC were back on Capitol Hill last week, testifying about their proposed merger. Interestingly, as the deal began both companies claimed that this deal was not about digital distribution. But as the testimony goes on, it’s clear that even if Comcast and NBC claim they aren’t focusing on emerging technologies, everyone else is.
And they should be. With the erosion of the broadcast hegemony, and the rise of DVRs, video-on-demand and online video, this merger has the potential to shake up the digital industry.
The fact is that an increasing number of Americans are watching time-shifted TV, video-on-demand and online video – and not just on YouTube or Hulu. According to the comScore Video Metrix, more than 50% of online video viewing comes from sites outside the top 25.
All these shifting habits are probably still good news for Comcast. In addition to offering subscription-based DVRs and pay-per-video-on-demand, online video is likely driving demand for Comcast’s broadband services. Once a customer has a broadband connection, there’s little chance they’ll downgrade to dial-up. But as more videos become available online, people might give up their Comcast cable subscriptions. That’s not good news for Comcast, and one of the reasons behind their partnership with Time Warner Cable to provide “TV Everywhere.”
“TV Everywhere” is an attempt by Comcast and Time Warner to go where their audiences are going. After all, people don’t care about the technology that delivers their favorite programming to their screens – they just want the show to play when they hit “on” or press “play.”
With the addition of the NBC Universal cable networks – Bravo, USA Network and SyFy, to name a few – to Comcast’s existing cable networks – like E!, Versus and The Golf Channel – and a dual-stream mode of content delivery, Comcast is well positioned to deliver content to people who want it when and how they want to watch it.
And in our increasingly fragmented media landscape, aggregation and distribution is a good business plan. It’s not enough just to aggregate – it might be sufficient in the short term, providing an incremental revenue stream or somehow making up for lost revenues in other areas of the business. But in order to reach the largest possible audiences, or retain an existing audience, distribution is necessary.
Comcast knows it can’t rely on cable subscriptions forever; NBC knows it has to find a way to monetize its broadcast and cable programming online. Both companies – and other MSOs, studios and record labels – are trying to solve a distribution problem they’d previously had under control, but has broken down in the digital age.
If this deal goes through, it will be a big digital win for Comcast. It already owns the methods of distribution, the two most common pieces of technology people use to access these shows today – the cable and Internet connections – and with the joint venture, it will have found a way to keep these pipes important.
Comcast has chosen its means of audience aggregation, but it’s not possible, and certainly not economical, for a company that wants to become an integral part of content distribution to build its own technological infrastructure. Fortunately, people behave more fluidly on the Internet than they do at home in front of their TV, and it is possible to aggregate interesting and targetable audiences of people online.
Whatever the aggregation technique, and whatever the distribution method, the goal is the same – to distribute content to relevant, interested audiences – and, of course, to make money doing it.