Comcast Could Use Universal to Test New Distribution

Windows are driving the discussion about Comcast's possible purchase of Universal Studios. Windows are time frames during which pictures can be viewed in theaters, on disc, over subscription cable channels or via video on demand. Universal, hurt by weak films and industrywide erosion in DVD revenue, is expected to become a laboratory for an owner that might have to reformulate the movie industry's approach to its own customers. Anticipate a thrust into digital distribution perhaps as aggressive as that signaled by the Walt Disney Company, which last month announced a new system, Keychest, intended to let consumers own digital entertainment for use on whatever device or viewing system they might like. One obvious possibility could involve selling films to Comcast's 24 million cable customers, via video-on-demand, at or near their DVD release dates, without the expense of a middleman. To date, about 90 percent of Comcast's extensive on-demand offerings have come without additional charge as part of a basic subscription package, a system that has built customer loyalty and taught consumers to select films on cable rather than disc. But the company for two years has been testing fee-based on-demand offerings simultaneously with DVD releases from at least seven companies, including Warner Brothers and Fox, in a number of markets, and has offered films as prominent as "Twilight," "Gran Torino" and "Bride Wars," splitting revenue with the studios that released them.