Comcast hails US video-on-demand trials

Comcast, the biggest US cable operator, on Thursday reported success in early trials to make movies available through on-demand downloads on the same day as they are released for sale on DVDs.

The trials, which are taking place in Denver and Pittsburgh, include movies from seven studios: NBC Universal, Warner Brothers, Paramount, Disney, Fox, Lionsgate and New Line Cinema.

Comcast said its revenues from pay-per-view movie downloads had grown steadily in the past few quarters. For the first time the company released specific information about this segment, saying that, in the first quarter of the year, pay-per-view revenue was $181m, up 26 per cent on the previous quarter.

“The trials show an increase in purchasing of movies,” said Steve Burke, president and chief operating officer at Comcast. He said the service, with movies priced at $3.99, would be extended to at least one other city and could be made available to all of Comcast’s customers.

The trials, which started a few months ago, are part of Hollywood’s efforts to find new ways to distribute movies digitally.

The profit margins of digital distribution - either through cable companies or the internet - are higher because there are fewer costs but there are concerns that these new methods might eat into other source of profits such as DVD sales or movie sales to television networks.

Although there are efforts to build up distribution of movies online, there are concerns about piracy, which is less worrying when distributing on a closed system like a cable network.

Comcast itself is also moving into online video distribution, recently acquiring movie information site Fandango.com and announcing plans for a site to distribute professionally produced television and movie content on the web.

As well as selling cable television services, Comcast offers high-speed internet connections and telephone connections, and demand for these has soared, especially as Comcast offers broadband speeds which are faster than some telecom offerings.

“Cable is now unmistakably regaining market share [from telecoms rivals] in broadband,” said Craig Moffett, analyst at Sanford Bernstein.

Specifically, Comcast, increased its quarterly profits by 80 per cent to $837m (including a one-off $300m gain from the dissolution of a cable partnership), and saw revenues increase by 32 per cent to $$7.39bn.