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Comcast invests in GridNetworks - May 19, 2008

That's quite a little digital buying spree Comcast has been on lately. The latest item: an investment by Comcast Interactive Capital in GridNetworks, the Seattle-based Internet television platform provider. The investment was announced Monday, as part of a broader agreement between the companies that includes a "collaborative relationship" aimed at developing ISP-friendly protocols for distributing high-definition video over broadband networks. The size of Comcast's investment in GridNetworks was not disclosed.

The GridNetworks deal comes one week after Comcast announced the outright acquisition of Plaxo Inc., an early developer of social networking for a reported $175 million. Plaxo, and the new investment in GridNetworks, will be folded into Comcast Interactive Media, which includes Fancast and thePlatform, the only publishing service Comcast acquired last year.

Comcast said the GridNetworks collaboration will further the cable operator's search for technologies that will help it meet growing demand for Internet-delivered video without crushing its broadband network. From the press release:

"The collaborative discussions with GridNetworks are timely as we are working hard with a number of technology companies, the IETF and other leaders in the field to improve the efficiency of P2P on ISP networks. We are interested in the application of P2P concepts in a manner that puts the quality of the consumer experience first, and enables lawful distribution of copyrighted content while also efficiently utilizing the network," said Tony Werner, Comcast Chief Technology Officer. "GridNetworks has experience in this area and will have valuable contributions as we set out to solve these issues together with the Internet community."

GridNetworks uses a hybrid of CDN architecture and P2P technology to support full-screen HD streaming.

Two questions:

1. Will Comcast eventually tie GridNetworks in with thePlatform? A combination certainly has the potential to create a powerful and flexible digital distribution platform.
2. Are we seeing the early stages of a plan by Comcast to build a proprietary broadband distribution platform or is it merely investing in specific capabilities? Comcast is the largest ISP in the U.S., just as it is the largest cable MSO. If content owners someday find they need to use Comcast Interactive Media's platform for reaching Comcast's market-leading share of broadband subscribers, what does that mean for other would-be providers of similar digital publishing and distribution services?

OK, that's three questions.

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