Comcast: 42% of digital subscribers use high-def, DV-R

At CES 2008 last month, it was surprising to see Comcast as a brand being tossed around with the likes of Matsushita, Motorola, and Sony. Now it's time to see if its video-on-demand strategy is starting to pay off.

Comcast today reported substantial increases in revenue and income in 2007, crediting this growth to a combination of acquisitions and operating results. Although the cable provider's growth in broadband and digital voice subscriberships slowed at the end of the year, Comcast also saw progress in areas such as high-definition (HD) TV and video on demand (VoD), where it is making new investments, including with respect to a project dubbed Infinity.

Like other cable providers, Comcast is moving into voice -- the traditional province of telecom providers -- while at the same time fending off mounting competition from phone service providers such as AT&T and Verizon in the data and video sectors.

All told, Comcast's revenues rose 24% to $30.9 billion in 2007, and operating income stepped up 21% to $5.6 billion, according to officials.

In a financial conference call today, Comcast CEO Brian Roberts did not rule out the possibility of further acquisitions.

"I want to address our acqusition strategy head-on. We are committed to remain discliplied in our approach to acqusitions, and we'll place every opportunity through rigorous financial and strategic filters," Roberts said. "To be clear, we are not spending any time on any of the large transformative acquisitions that [others] have been speculating about, such as Yahoo or Sprint."

On a year-over-year basis, Comcast's digital cable subscribership stepped up 33% in 2007, with the addition of 2.5 million new customers.

But Comcast added merely 331,000 broadband subscribers during the fourth quarter of 2007, in comparison to 450,000 broadband subscribers in the third quarter. Similarly, Comcast's numbers of new digital voice subscribers dropped from 662,000 in the third quarter to 604,000 in the fourth quarter.

On the other hand, Comcast's recent emphasis on high-end video services appears to be paying off.

In 2007, 6.3 million -- or 42 percent -- of Comcast's digital cable subscribers used "advanced services" such as HDTV (high definition TV) and DVR (digital video recorders), in comparison to 3.6 million -- or 36 percent -- in 2006.

Revenues from Comcast's On Demand pay-per-view VOD service jumped 22% in 2007 to $774 million.

"We continue to roll out advanced digital video services like HD and DVRs, and we are committed to delivering truly superior high-definition television and unmatched interactive TV. For high-def that means nearly 300 choices today, growing to over 1000 HD choices for virtually every Comcast High-Def customer by the end of this year," Roberts said today.

"Next, we are working on a new architecture that will let us offer every month over 6,000 movies on-demand to our customers, more than 3,000 of them in high-definition. In fact, this new architecture paced away for our ultimate vision of what On Demand can be. We call it Project Infinity."

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