The cable operator has bulked up its online-sales team and plans to open its Comcast.net portal to all its customers -- increasing the potential audience from its 10 million high-speed-data subscribers to its 23 million video subscribers. And that's just for starters.
According to TV network executives familiar with Comcast's plans through content-carriage negotiations, the cable operator has Yahoo-size ambitions and sees the internet as key to raising its profile, and share of ad budgets.
Online ad spending to reach $25.5 billion
Online ad spending is expected to grow 15.2% compounded annually to $25.5 billion in 2010, according to PricewaterhouseCoopers. Spending on Comcast's core internet business -- broadband access -- is expected to rise 9.6% compounded annually to $30.8 billion.
Comcast hasn't publicly talked about just how big it wants its online-video offering to get, saying only that it's exploring all online options.
"For us to be successful online, you have to believe that people will still want to come to a single source for much of their online-video entertainment," said Warren Schlichting, VP-new business strategies at Comcast. "That's the basic underlying philosophy. We think there's a role for somebody to work with many content providers."
Comcast.com has already had a taste of early success. It gets 1.5 billion page views per month and is the No. 3 site in terms of repeat visits. About 70% of its broadband customers use the Comcast.net portal and have Comcast.net e-mail addresses. It's the most-used broadband portal in the U.S., and Comcast's broadband player, The Fan -- with video from E!, ABC News Now and the Associated Press -- is tracking at more than 60 million views a month, and that's with a viewer base of 10 million high-speed-data customers, Mr. Schlichting said. By contrast, the video-rich CNN.com, which is open to all, gets about 60 million video views a month.
And because Comcast already has carriage deals in place with almost every major cable network, it has built-in advantages for creating a site rich with video. The trick will be figuring how to monetize that video. Will there be a revenue-sharing agreement a la most of the online distribution models today? Or an inventory split similar to the way TV networks share programming with affiliates?
"It's smart to look to build an entertainment portal online to complement what they're doing on the TV set," said Greg Verdino, director-emerging media, Digitas. "But the members-only cable model flies in the face of the history of the internet. Trying to import the walled-garden approach from TV to the internet is a mistake."
Up until now, advertising on Comcast.net has been a basic approach: graphical banner ads on almost every page. With an increased emphasis on interactive, the company is expanding its rich-media offerings and getting into pre-roll video ads. And its interactive-sales team now numbers between 25 and 30, said Mr. Schlichting, thanks to additions from Accuweather, ABC.com, Adelphia.net and ESPNRadio.com.
Premium content with scale
Clearly online players that can marry premium content with scale have much to benefit from online advertising trends. According to eMarketer, during the second quarter of 2006 marketers spent one-third of their interactive advertising budgets on Yahoo, MSN and AOL. The figure doesn't include Google, which is looking more portal-like by the day, thanks to features like Google Finance, Gmail and the much-rumored Google Health.
Earlier this summer Comcast bought The Platform, a video-serving technology company, which will allow Comcast to process video streams for video on demand, broadband and mobile -- essentially becoming a one-stop shop handling both production and distribution for its content partners.