Comcast (s CMCSA) took the beta tag off its Xfinity TV service yesterday, making the online video service available to all of its pay TV subscribers, regardless of their ISP. Take that one step further, with Comcast offering Xfinity TV as a paid service to consumers that don’t already live in its service area, and you mark the beginning of the end for pay TV being tied to the physical cable plant.
So far, Xfinity has been offered to Comcast’s existing subscribers in what looks like a defensive maneuver to keep them from cutting the cord. With average cable subscriptions edging above $70 (and anecdotal evidence suggesting that many subscribers pay well north of $100), companies like Comcast have rolled out TV Everywhere services as a way to give more value to customers, by allowing them to watch cable content online.
Comcast now boasts more than 150,000 videos from 90 different content partners, but the real key to Xfinity TV is the content available only to Comcast customers. The whole idea behind TV Everywhere is that subscribers will also get access to online content in addition to what they pay for through linear cable programming.
While that service was once offered only to customers that paid for cable and high-speed Internet, Comcast is now making Xfinity TV online available to pay TV subscribers even if they use another ISP for broadband. That still limits the potential number of TV subscribers to those that live in residential areas that Comcast has infrastructure and provides service to. So what if Xfinity TV weren’t tied to Comcast’s physical cable plant at all?
With access to a wealth of streaming content already, Comcast could offer up an over-the-top video service in markets that it doesn’t already serve, and it could do so without building out the costly network infrastructure or getting the franchise agreements usually required. Comcast could finally become bigger than its actual network footprint, and it could add users as opposed to watching them defect to competitive IPTV, satellite (and increasingly) online offerings.
Since it wouldn’t be paying for network infrastructure, it could (again, theoretically) undercut those local competitors with a cheaper online offering and still provide much of the content that is important to its viewers on-demand. Like Netflix, (s NFLX), it would essentially compete against other cable providers, using their own data networks to do so. Not just that, but if and when its merger with NBC Universal (s GE) goes through, it would be able to include that content as well.
Comcast has downplayed this point in its communications to the FCC seeking approval of the merger, saying that online video today isn’t truly competitive to cable TV, nor will it be anytime soon. In defending the deal, Comcast says that its properties, combined with NBCU and its stake in Hulu, make up only a small portion of online video viewing and ad revenue.
But at the same time, Comcast is building an online video powerhouse that could totally change the paradigm of how content is consumed and delivered. With 150,000 titles and access to content from various premium cable networks, Comcast could beat out Netflix, Hulu or any other online video service, if only it weren’t tied to the physical cable plant.
Granted, not everyone would be on board with such a plan. A Comcast spokesperson confirms that the rights negotiated with content partners for Xfinity TV tie the availability of online access to a physical pay TV subscription. And some cable networks — like HBO, for example — have been extremely hesitant to make content available online except as part of a TV Everywhere offering.
But in tomorrow’s all-IP, all on-demand world, should it really matter if a pay TV subscriber is connected to the local Comcast headend or if he gets his content delivered over-the-top through another ISP? In that brave new world, it shouldn’t matter to the content owner how his content is delivered, merely that it’s bought and paid for.
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