The general view in the venture community is that it is very difficult to make money on cable technologies. Brian Roberts, CEO of Comcast and son of its founder, came to the center of the venture capital business on Sand Hill Road to inspire venture investment in cable. Brian is a very accomplished person and has managed Comcast to king of the cable hill. The cable industry was created by true cowboys, a colorful lot who wheeled and dealed, bluffed and stuffed their way to sizable franchises. Brian was the only guy in the room with a tie, which shows how the industry has matured. He was quite engaging, albeit in some cases he gave with one hand then pulled back with the other. His core message is that competition and consolidation have changed the prior dynamics of dealing with the cable cowboys. Did he make his case?
He first noted that on-demand is working, and he sees the future as MyChannel (my words) rather than techno speak like IPTV. He then said he was unwinding all the closed platforms he had inherited, including Motorola's conditional access, to prepare for the all digital network. He said we should soon expect a 'network DVR' with much more storage than a Tivo type of box to allow even more personalization of the customer's video wishes. This allows a simulcast delivery model to a cheap ($60) STBs and recapture of the analog channels resulting in a 20x increase in delivered channels.
He wistfully noted that when Eric Schmidt said Google wouldn't have happened without broadband, he wondered why they failed to get stock options. Got a chuckle but sent a chill. He ragged on DSL dropping price, and asked rhetorically if Hyundai dropped price, would BMW match?
He noted that by opening the proprietary conditional access/security system (CAS) allows third party boxes like Tivo, and new broadband services, to flow through. He is in a competitive race with satellite and "the Bells", and he says the ventures who come with him will be rewarded.
He was challenged on this due to Comcast pushing their own DVR. Brian answered that there are Apples and PCs since some consumers love the Mac, and so Tivos can thrive due to its interface. He was then challenged on any room for new services. He started with a story that CNN and other new channels were pushed by entrepreneurs not the cable companies, and then went in to essentially say Comcast was going to learn how to be an innovator of services and not let that happen again. He then dove into the issue of whether network DVR is permissible under the Betamax decision; but he said Comcast would continue anyway since this is how they differentiate from satellite: putting the storage in the network rather than the STB is how they build different capabilities.
Then came the core question: how do venture capitalists make venture returns, as cable has been a tough customer? Brian's answer is that consolidation makes it easier, since in the prior regimes we had too many crusty entrepreneurs to deal with (Malone, Paul Allen, ATT). He noted how getting out of the Moto CAS and Gemstar EPG deals opens their ability to let new ventures in. Also they are subject to competition that they weren't a decade ago. As an aside, he said he was more worried about satellite (Rupert Murdoch) than the Bells. "Rupert is a killer."
His venture wish list:
- unified messaging across Comcast email, voicemail, presence (IM) on one platform
- parental control and permissioning
- broadband applications
- tech-enabling low cost settops
- small business wireless
- new broadband connected devices
- video search and navigation
- voice-activated remote control (he is experimenting with AgileTV)
- personalization
- secure portability of content
- advances in storage and streaming
What about wireless? Not too worried about data, since they can increase speed and HD is coming. Are you really going to watch TV on your cellphone? It is really more about portability of the content from the network to car or plane. For voice, he wants a combo phone (wifi cellphone). This would fit with unified messaging.
