By Forrester Research
Special to CNET News.com
February 11, 2004, 10:30AM PT
By Josh Bernoff, Principal Analyst
Comcast launched a $66 billion takeover bid for Walt Disney on Wednesday. Without favoring Disney content, Comcast could use this move to jump-start video on demand and to shape of the future of on-demand media.
Embattled Disney has rejected this takeover offer. We think this is a mistake. Even more than weak ratings at ABC and pressure to cut fees at ESPN, Disney faces a long-term problem: As digital video recorders and video on demand take off, the power of networks will fade. Here's what Comcast--and networks--will do:
But it will use Disney to jump-start video on demand and broadband. Despite its aggressive moves in video on demand, Comcast has failed to get mainstream networks to offer popular content in video-on-demand tiers. This would change. By including Disney content, ESPN sports events and ABC network shows--with advertising--in its free video-on-demand offering, Comcast could do two things: first, make video on demand a popular destination, rivaling broadcast television, and second, develop an advertising model that benefits both Comcast and its network content partners. Similarly, we expect Comcast's high-speed Internet offering to feature Disney content.
Other networks will eye distribution. With Comcast owning Disney, Viacom looks vulnerable, despite its strong media properties. With cash generated from the planned Blockbuster sale, it could make a move for financially troubled operators Charter Communications and Adelphia Communications and their 12 million households. NBC, digesting Universal Studios, is more likely to cozy up to Comcast than plan a cable operator acquisition.
© 2004, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.