The amount of online video that consumers watch is growing rapidly, but Comcast (s cmsca) doesn’t see it as a competitive threat to its cable business, according to a filing it submitted in to the Federal Communications Commission in response to critics of its proposed NBC Universal joint venture yesterday. In the filing, the cable company defended the deal by saying that it had no financial incentive to thwart the growth of online services, nor did it have significant market power to do so.
Comcast stood by earlier statements it made when the deal was announced, that its online properties would be complementary and not competitive to its traditional cable distribution business. “[B]oth programmers and consumers view online video as a complement to, rather than as a substitute for, traditional linear MVPD [multichannel video programming distributor] service,” it wrote in the filing.
But furthermore, Comcast said it doesn’t see online video emerging as a competitive threat any time soon. There are “several impediments — technological, pricing-related, and rights-related — [that] make it highly unlikely that online video will become a substitute for MVPD service in the foreseeable future,” the cable company writes.
Due to the complementary nature of online video, Comcast says it is important to use this channel to promote views of its content online as a way to create interest in its linear programming, which means having as wide a distribution network as possible. As a result, it says the combined entity will have no incentive to withhold content from other online distributors.
Comcast said that not only does it not have any incentive to disrupt the nascent online video market, but that it lacked sufficient market power to do so. With the proposed GE transaction, the combined assets would account for just 13.7 percent of all cable viewing, and significantly less share in the burgeoning and extremely fragmented online video space.
Even if it withheld content from competing services, Comcast says that “there is no evidence that content created by any single cable programmer is necessary for the viability of an online video distributor.” It pointed out, for instance, that Viacom’s withdrawal of Comedy Central content such as The Daily Show and The Colbert Report from Hulu hasn’t had an effect on the size or growth of the online video site.
But what about keeping others from being able to distribute their content on Fancast or other Comcast-owned properties? That was one concern of independent content creator WealthTV, for instance. Comcast again points to its small share of the online video market, saying that independent content creators have innumerable outlets through which they can get their content distributed, such as YouTube (s GOOG) and CBS’s (s CBS) TV.com. “Comcast’s online video sites account for less than one percent of professional videos viewed, NBCU’s video sites account for less than two percent of professional videos viewed, and Hulu accounts for approximately ten percent of professional online videos viewed.” As a result, Comcast says independents could still reach nearly 90 percent of the market by striking deals with other distributors.
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