Comcast's Xfinity Store: Looking Deeper on the Despicable Me 2 Headline

I was surprised by the reports of the strong showing of the Comcast's new Xfinity TV Store in the sale of Despicable Me 2. 

A strong start for the Xfinity TV Store is counterintuitive in several ways:  Apple's iTunes Store or Amazon.com, the big sellers of downloadable content, are generally considered good retailers of content. Xfinity's brand is not known for downloadable "owned" content. Usually sales for a new business are pretty modest as potential customers wait to see if the vendor is reliable, etc.

Comcast, which is always aggressive in playing up its good news, issued a press release that its new store sold more downloadable copies of the title than iTunes or Amazon or Walmart's Vudu or anyone else. There is another data point in support of a strong start for the Xfinity TV Store: Todd Spangler reported in Variety that the Comcast store was also the top seller of The Hunger Games for its first 2 weeks of release.  While Despicable Me 2 is from Universal Studios, which is owned by Comcast (and may have gotten some extra promotion for that reason), Lionsgate, the studio behind The Hunger Games, is a true third party. Is it possible that Comcast is already an important outlet in the electronic sell-through market? If so, how and why?

 
While the Xfinity store is available to all US Internet households on the web, there was probably little awareness of it as a purchase option outside of the 20% or so of the households that are Comcast subscribers. When I searched for "Xfinity Store Despicable Me 2" I did not find the sort of product index page like one finds for Amazon or iTunes, I found this -- no download to own online link at all under "Available Online". Instead, the circled text says "The full movie is currently not available Online."

It doesn't appear that Xfinity is providing any special value to consumers. The Xfinity-purchased Despicable Me 2 is not offering any better/different features than those available from other sellers of the title. If anything, Xfinity's TV Store page to market the title is much weaker.

Clicking on the "Available on TV" button on the Xfinity Despicable Me 2 page yielded this screen: As you will note, at this time there is no online rental option, only a purchase option (see inside the marked oval) and no mention at all that consumers making this purchase can also view it online, download to other devices, etc. So the big innovation does not appear to be the play anywhere feature of the purchase, but simply that Comcast is effectively using the pay-per-view movie rental store to sell movies before they are available in the rental window. Comcast isn't doing something better than Amazon or iTunes, they are doing something different.. 

Upon close inspection, the Xfinity store does have two clear advantages over iTunes, Amazon and Vudu. First, the store is available in the cable system's electronic program guide, the primary place viewers search for something to watch. Second, purchases from Xfinity are integrated into the cable set-top box's navigation; the viewer does not have to switch his or her TV to input 2. 

In contrast, purchases from Amazon or iTunes require a separate search (on a computer or tablet or phone) and typically require the use of a separate device (Roku or Apple TV or blu-ray or Chromecast) for viewing on the household's main TV. Also, that TV has to be switched to another input. While switching inputs might not seem like a big deal to many, only 2 of the 4 members of my household can do it reliably and Bright House, the cable MSO, offers a tech support page devoted to the topic. 

Strategically, if the MSOs enter the electronic sell-through business in a bigger way and these movie-rental-searching-during-the-sell-through-window and "input 1" advantages are borne out, the cable distributors could become even more important purchasers of content. The last decade has seen MSO's bargaining power eroding with strong basic cable programmers and top broadcast stations. Being a force in electronic sell-through would not change that. However, on a more macro level, strength in electronic sell-through would tend to improve distributors' bargaining position with content suppliers. For that alone, this is a development to monitor. 

Update (10 Feb 2014): Lionsgate's CEO stated on 7 February 2014 that Comcast represents 15% of the US electronic sell-through market and that he expects other MVPDs will enter the market.
Update (10 Mar 2014): Netflix's House of Cards will be sold in the Xfinity store, which Comcast Cable CEO Neil Smit notes "has surprised us" in how well it has done.

ESPN 3D Is Dead, Here Comes Ultra HD

With the announcement yesterday that ESPN is shutting down its 3D service, it appears that any chance that 3DTV would catch on with consumers has bitten the dust.

My view is that what doomed 3DTV was less the glasses required for 3D viewing -- which are a significant issue -- but more the fact that 3DTV simply wasn't that compelling a viewing experience. 

I remember heading to the 2010 Cable Show in Los Angeles, convinced that I was going to buy a 3D TV upon my return home -- industry interest in 3D was sky high and it looked like a very promising new business opportunity. However, after seeing every single 3D demo on the exhibit floor -- maybe 25 in all -- I though that the experience was underwhelming, when it wasn't actually bad.

What is most interesting about the experiment with 3DTV is how it completely tracked the initial enthusiasm for 3D movies in the 1950s and then their subsequent fall from favor. Around 1980 or so I saw the 3D Creature from the Black Lagoon and Dial M for Murder, but they didn't make me wish that the big films of that period, like Jaws or Star Wars, were in 3D.

In contrast with that experience, this year I saw Ultra HD (also known as 4K) sets on the exhibit floor this year (in Comcast's and Samsung's booths) and both looked pretty spectacular. I don't know if Ultra HD's combination of price, content availability and quality will ever get sufficient traction to be successful in the market, but I do know that the quality is uniformly very good and readily apparent.

Ultra HD set from Samsung booth -- photo does not do it justice; Van Gogh's Café Terrace at Night

Interestingly, the content that might first make a difference on these sets may be consumers own still photographs. Still pictures of masterpiece paintings were used on the demo by Samsung. Consumers' photos are already available in resolutions far beyond that of a 1080p set. An Ultra HD Apple TV device might be a great early use case. Apple already has experience with greater than 1080p resolution displays from their experience with the "Retina" displays in both the iPad and certain MacBook Pros.

More on this: Brian Stelter, New York Times