Comcast Corp. (CMCSA), the nation's largest cable provider, gave an early glimpse this week of some technological advancements it's planning for its services as the company aims to keep pace with the march of digital video, which is threatening the traditional pay-TV business.
The advancements include more powerful chips in its set-top boxes, a new interactive video guide and a partnership with Internet telephone service Skype. The moves are designed, in part, to keep the television as a primary place where people consume media.
Comcast, with its deal for control of media conglomerate NBC Universal complete and its cable business churning out cash, has a strong hand for shaping the future of media, but it's playing defense against a wave of innovation coming from Silicon Valley and elsewhere.
Cable companies aren't renowned for innovation, but Comcast casts itself as ready to overhaul its services after investing billions in its wireline networks to provide a backbone for media distribution in the digital age. It's widely recognized, however, that the rise of online video--and the success of tech companies like Apple Inc. (AAPL), Google Inc. (GOOG) and Netflix Inc. (NFLX)--has pushed its hand.
"I think this industry has risen to the challenge," Comcast CEO Brian Roberts said Thursday at an annual gathering of the cable industry hosted by the National Cable & Telecommunications Association in Chicago. "Rather than shying away from uncertainty, we went out and spent [billions] to completely rewire our networks.
"We're as relevant as we've ever been and getting more so as we look to the future," Roberts added.
He then gave a demonstration of a new TV service being tested in Augusta, Ga., which requires a more powerful set-top box with microprocessors from Intel Corp. (INTC). The service delivers a revamped user interface using Internet Protocol technology, providing an easier way to search content options and a more personalized, interactive experience incorporating social media tools, like Facebook.
Roberts said the service is a "hybrid," combining the qualities of the Internet and digital software applications with Comcast's video service, but it's delivered over Comcast's closed network--not the Internet.
In addition, Comcast plans to launch faster network speeds, and it will start testing a new video-recording service that lets customers store programs remotely on the company's server computers rather than on set-top boxes.
It also announced a partnership with Skype to provide high-definition video chatting for its customers on their TV set. The service will require some hardware, which Comcast will provide, like a small camera and a box that connects its broadband service to the set-top box.
"We're in the fastest innovation cycle that the industry has experienced," said Neil Smit, head of Comcast's cable division, noting that the company has launched about a dozen new products and features in the past year. "You'll see us go even faster in the next 12 months."
Comcast executives say the upgrades to the company's networks allow it to shift its video service away from reliance on the set-top boxes in customers' homes to the company's servers--or "the cloud," in tech industry parlance. That shift will allow Comcast to push out new software features and other upgrades to its customers more quickly, ending the long lag time the industry has traditionally endured in rolling out new services.
The shift is also aimed at linking together its product lines--TV, broadband and phone service--and allowing customers to access them across a range of new digital devices, from personal computers to tablets and smartphones.
Such advancements could help Comcast retain customers in the face of stiffer competition, as well as gather usage data from customers that could be of great value for advertising and other purposes.
While benefitting all devices, the moves particularly strengthen the abilities of a television. Roberts this week urged his industry to stay focused on the importance of the television set, despite the popularity of new mobile devices.
"We need to make the television feel as relevant as all these other products," Roberts said.
Tom Rogers, chief executive of TiVo Inc. (TIVO), which partners with cable operators to provide user interfaces, said Comcast's plans reflect the rapid pace of change that is coming to the TV industry.
"Even a year ago, it wasn't clear that broadband to the TV was going to go mainstream, and now that's a given," Rogers said. "There's more video choice outside of cable, and you have to make sure your video product is taking advantage of that."
TiVo serves consumers in foreign markets without any set-top box, but Rogers cautioned that it will take a long time for U.S. cable companies to make that switch.
"The world where people have set-top boxes is a world where the cable companies have an advantage," Rogers said.
-By Nat Worden, Dow Jones Newswires; 212-416-2472; firstname.lastname@example.org