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Comcast looks to niche audiences with its online video service

The rumor has been confirmed: Comcast will start testing its own online video service by the end of 2014. But the company insists it’s not trying to create its own version of YouTube. Instead, Comcast wants to reach niche markets too small to justify a cable TV channel of their very own, but large enough to be attractive to advertisers.

Because in the tech biz, it’s not always about the tech, but it almost certainly is about the money.

Comcast senior vice president of video Matt Strauss told Gigaom’s Janko Roettgers that the new Comcast service will be available on its new X1 cable set-top boxes, via a dedicated app. (We’ll call it the X1 app.) Although Comcast subscribers will be able to upload their own content—a la YouTube—the emphasis will be on niche market content, such as foreign-language TV channels and specialty formats.

The payoff: Delivering online niche channels will allow Comcast to escape the bandwidth straitjacket that today’s cable TV networks operate under. Even with digital transmission and video compression, there’s only so many channels that can be squeezed down this pipe.

As well, using the Web will allow Comcast to experiment with new channels at no additional transmission cost, and without disrupting its existing cable TV lineup. Keeping this content limited to Comcast customers will also give the cable TV company an additional sales tool to keep subscribers loyal and paying—assuming that the X1 app content is interesting enough.

Providing online videos via a dedicated X1 app will also be good news for Comcast customers, who will get access to content not available on cable (and satellite, for that matter). What remains to be seen is what price, if any, Comcast would exact from subscribers for using the X1 app.

Comcast isn’t the only major company with YouTube-like visions dancing in its head. Yahoo is plotting a direct challenge to the Google-owned video site via its Yahoo Screen video site. It has even been trying to lure top YouTube stars to Yahoo Screen with promises of higher ad revenue.

As the Web becomes more popular for watching and offering video services, you can expect other content providers and distributors to jump on the online video bandwagon. That’s because it’s all about eyeballs: Comcast and the other content distributors need to be where people are watching video in order to sell subscriptions and keep that revenue coming in.

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