Charter Spectrum Loses 77,000 Q3 Video Subs; Ups Criticism of Shared Passwords

Charter Spectrum joined other pay-TV distributors reporting ongoing subscriber losses of traditional linear video entertainment in the home.

The company Oct. 25 said it lost 77,000 video subs in the third quarter, ended Sept. 30. That compared with a loss of 66,000 subs in the previous-year period.

The service has jettisoned 415,000 video subs in the past fiscal year, ending the period with 15.7 million.

Charter did add 351,000 broadband subscribers, underscoring ongoing consumer migration towards over-the-top video services such as Netflix and online TV. It added 266,000 high-speed Internet subs during the previous-year period.

The service ended the period with 24.5 million broadband subs, up from 23.3 million subs a year ago.

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With the onslaught of high-profile SVOD services from Disney and Apple, in addition to WarnerMedia early next year, CEO Tom Rutledge was asked about the growing industry concern regarding the sharing of user passwords among non-subscribers.

Without naming offending OTT services, Rutledge alluded to third-party streaming services affording simultaneous access to five separate users with no location-based security.

“I feel like I’m beating my head against the wall talking about privacy or piracy, password sharing and pricing, but they’re all inter-related issues,” Rutledge said on the fiscal call.

Charter CEO Tom Rutledge

He criticized content creators entering the distribution market seemingly indifferent to where their programming is going.

Indeed, Netflix, which has heretofore turned a blind eye toward password sharing, has begun looking into the practice.

“It has not been part of their DNA [worrying about it],” Rutledge said. “Most households in the United States have two or less people in them. And as a result of that, there are more streams available [for free] than there are households.”

The executive contends that until there is increased scrutiny on video access in and out of the home on a single account, “it’s just too easy to get the product without paying for it.”

“When we look at data consumption, we can see that video consumption isn’t going down even when people disconnect their paid video,” Rutledge said. “And as a result of that, it makes the [subscription] price value relationship really difficult when it’s free.”

Separately, Rutledge said Spectrum was considering partnering with Comcast’s Flex SVOD service for broadband-only subscribers.

Charter several years ago bowed Spectrum TV Plus, a $12.99 monthly online TV service for its broadband-only subs. The service included a free Roku player.

In 2018, the service was changed to $14.99 Spectrum TV Plus. Last year Charter unveiled “TV Essentials,” a $15 monthly “skinny bundle” option for pay-TV subs.

“We have a significant number of app based relationships that we’ve developed on multiple devices, and that strategy is working for us,” Rutledge said. “And putting inexpensive devices out with your service makes some sense to us.”

PlayStation Vue Adds Local Fox, ABC TV Stations

Sony’s online TV service PlayStation Vue has added 16 local television stations to its channel portfolio, including Fox and ABC affiliates.

With most online TV services such as Sling TV, Fubo TV, DirecTV Now, YouTube TV, Hulu with Live TV and Spectrum TV Plus offering the same pay-TV channels 00 including premium channels HBO and Showtime, Starz and Cinemax – increasing points of differentiation involve featuring local TV stations.

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New ABC stations on Vue include: WATM ABC 23 in Altoona & State College, Pa.; KYUR Anchorage, Juneau, Fairbanks, Alaska; WTEN News 10 in Capital District, NY; WAOW ABC 9 in Central Wisconsin; WCTI ABC 12 in Coastal North Carolina; WOAY in Eastern West Virginia; KAEF ABC 23 in Eureka, Calif.; KTXS 12 in Midwest Texas; KBMY 17 in Minot-Bismarck Area; KRCR ABC 7 in Northern California; WBND ABC 57 in South Bend, Elkhart, Ind.; WTXL ABC 27 in Tallahassee, Fla. And KTKA in Topeka, Kan.

Fox stations include: WZAW in Central Wisconsin; WVFX Fox 10 in Clarksburg, WVa., and KIIT Fox 11 in North Platte, Neb.

Charter Spectrum Softens Q3 Video Sub Loss

Charter Communications Oct. 26 disclosed it lost 66,000 video subscribers in the third quarter, ended Sept. 30, and improvement from 104,000 video subs lost in the previous-year period.

The nation’s third largest pay-TV operator (after acquiring Time Warner Cable and Bright House Networks) attributed the reduction to sales of standalone online TV service Spectrum TV Streamand Spectrum TV Choicevideo packages. It ended the period, however, with 16.1 million video subs – down 258,000 subs from 16.39 million reported last year.

“At the end of 2018, our integration of legacy TWC and Bright House will be largely complete, and we will operate as a single company, with a superior product and value proposition,” CEO Tom Rutledge said in a statement.“With significantly less customer-facing change in 2019, we expect continued improving service metrics with higher demand and retention, faster growth and falling capital intensity, driving meaningful free cash flow growth.”

Indeed, Charter added more than 1 million high-speed broadband customers in the past 12-month period, ending the quarter (266,000 net additions) with 23.3 million.

Parks: OTT Video Adoption Growing Among Pay-TV Cord Cutters

With Comcast and Verizon this week reporting ongoing declines in traditional pay-TV subscribers, new data from Parks Associates shows that consumer perception of a poor value proposition in pay-TV remains the top trigger for changing, downgrading, or cancelling services.

Among households that have made pay-TV changes in past 12 months, one-third of cord cutters (33%) and 10% of switchers or cord shavers plan to use paid OTT services as a substitute or alternative for pay-TV.

In addition to subscription streaming VOD services such as Netflix, Amazon Prime Video and Hulu, online TV services include Sling TV, Playstation Vue, DirecTV Now, Pluto TV, Fubo TV, YouTube TV, Hulu with Live TV and Spectrum TV Plus, among others.

“The primary driver for pay-TV cancellation and downgrades continues to revolve around pricing and perceived value,” Brett Sappington, senior director, research, said in a statement. “While some consumers consciously plan to use OTT video services to address the absence of pay-TV content, most consider each offering on its own merits.”

Sappington said the “deeper issue” is in the influence OTT video is having on what consumers consider to be a good value. When video services with good quality are available for under $15, it forces operators to justify an $80 pay-TV bill.

Indeed, consumer Katie O’Shea from Travelers Rest, SC, said she plans to switch to $35 DirecTV Now as soon as she can get out of her $200 DirecTV contract – the latter including broadband service.

“I have 400 channels, most of which I don’t watch or even know what they are,” said O’Shea.

 

Online TV Services Added 868,000 Subs in Q2

Online TV services such as Sling TV, DirecTV Now, Philo TV and PlayStation Vue added a combined 868,000 subscribers in the second quarter, bringing the total number of virtual MVPD subs to 6.73 million, up 119% year-over-year, according to new data from Strategy Analytics.

Despite this, overall pay TV subs (cable, satellite, telecom and online TV) fell to 93.78 million, breaking a string of two consecutive quarters of growth, according to the report that examines the subscriber bases of 27 public traded and private pay TV operators, accounting for 97% of all pay TV subscriptions.

“While the entire [online TV] segment is growing, AT&T’s DirecTV Now deserves special notice given how rapidly it has grown in a fairly short period of time,” Michael Goodman, director, television and media strategies, said in a statement. “If it continues on its current growth trajectory it will overtake Sling TV as the largest vMVPD in early 2019.”

In comparison, 2Q was not particularly kind to legacy pay TV providers as they lost nearly as many subscribers (973,000) as the prior two quarters combined (-1.16 million). In the quarter, total legacy pay TV subscriptions fell to 87.05 million, down 3.6% from the previous-year period.

“Historically, pay TV in the U.S. has consisted of cable, satellite, and IPTV; however, the introduction of over-the-top pay TV services, commonly referred to as vMVPDs, necessitates a change in our thinking,” said Goodman. “What we have commonly referred to as pay TV (cable, satellite, and IPTV) should now be referred to as Legacy Pay TV, while the definition of Pay TV should include vMVPDs.”

Sling TV Subscriber Growth Slowing

Dish Network Aug.3 reported that its pioneering online TV service, Sling TV, ended the second quarter (ended June 30) with 2.344 million subscribers – marginally more than the 2.3 million subs reported at the end of Q1.

The satellite TV operator launched Sling TV in 2015 as the first standalone online TV service, and first platform offering access to premium TV channels outside of the traditional linear bundle, including ESPN.

The market now includes Sony PlayStation Vue, DirecTV Now, YouTube TV, Philo TV, Spectrum TV Plus, Hulu Live TV, Fubo TV and AT&T’s WatchTV.

Dish said it added 41,000 Sling TV subs in the Q2, down from about 91,000 sub additions in Q1. The company closed Q2 with 10.653 million Dish TV subs. When combined with Sling TV, Dish ended the period with 12.997 million total pay-TV subs compared to 13.332 million pay-TV subs in the previous-year period.

Indeed, Dish lost 335,000 net subscribers in the period compared to 196,000 subs in the last year’s period. Lone improvement: annual monthly churn rate dropped to 1.46% versus 1.83% for second quarter 2017.

 

Charter CEO Vows Mobile Solution Following Pay-TV Sub Loss

Charter Communications is testing a mobile video platform among 5,000 of its employees, with plans to roll out service nationwide later this year.

Dubbed “Spectrum Mobile,” the platform incorporates mobile virtual network operator(MVNO) technology from Verizon Wireless.

“Ultimately, the goal is to use our mobile service to attract and retain cable bundled, multi-product customers,” CEO Tom Rutledge said on the April 27 first-quarter fiscal call.

Indeed, Charter was one of the first pay-TV operators (after Dish Network’s Sling TV) to launch a standalone online TV service — dubbed Spectrum TV Plus — to its broadband-only subscribers.

Charter, which is melding Time Warner Video and Bright Cove Video into the Spectrum brand, is looking for answers following a fiscal period that saw it lose 122,000 pay-TV subscribers – three times higher than Wall Street projections.

Charter, like most Internet service providers, gained 331,000 high-speed Internet subs, but that was lower than the 370,000 projected broadband additions.

The pay-TV sub losses saw Charter’s stock plummet to its lowest level in nine years.

“The changes in the video business are significant and hard to predict, but there’s video growth capable inside of our asset base,” Rutledge said on the call. “Our activity and our project management is going as we expected and the kind of marketplace acceptance of our products is going as we expected.”

 

 

NAB: 70% of PlayStation Vue Streaming on Non-PS Devices

About of 70% of subscriber streaming on PlayStation Vue occurs through non-PlayStation devices, Dwayne Benefield, VP, head of PlayStation Vue, told attendees April 11 at the Streaming Summit at the NAB Show in Las Vegas. About 80% of streaming is for live TV.

Launched in 2015 by Sony, PS Vue joined Dish Network’s Sling TV attempting to redefine pay-television over the Internet with standalone service offering access to premium channels, including local, without long-term contracts.

The platforms have since been joined by DirecTV Now, Hulu With Live TV, Spectrum TV Plus, YouTube TV and Fubo TV looking to replicate traditional broadcast online with a-la-carte pricing.

Benefield said the average Vue subscriber streams five hours of content daily. While the PS Network has 70 million subscribers across 165 countries, Benefield did not disclose specific subscriber numbers for Vue.

The executive said online TV platforms are getting increased stacking rights to catalog episodes of TV shows as creators and distributors recognize the growing market appeal of online TV.

Benefield said there remains value in the traditional pay-TV bundle, but that online TV represents a growing, cost-effective alternative.

“As [the bundle] does fray, you’ll see us add more a la cartes,” he said in the keynote, as reported by Multichannel News. “I think [online TV] can succeed without broadcast.”

Sling TV Tops 2.2 Million Subscribers

Dish Network Feb. 21 announced that its Sling TV unit ended 2017 with more than 2.21 million subscribers – up 47% from 1.5 million subs at the end of 2016.

Launched in early 2015, Sling TV was the first standalone online TV service, offering access to 20 pay-TV channels priced from $20 monthly without a contract.

The service was the first to offer ESPN outside the pay-TV ecosystem. The concept was so new (Disney licensed ESPN as an experiment) that a blank screen aired during commercial breaks – underscoring marketers’ unfamiliarity with the distribution channel.

Today, online TV represents an alternative to cord-cutters and ongoing erosion of pay-TV households in the Netflix-fueled, over-the-top video era.

Other online TV platforms include PlayStation Vue ($40-$75), DirecTV Now ($35-$70), Spectrum TV Plus ($30), YouTube TV ($40), Hulu With Live TV ($40), FuboTV ($45) and Philo TV ($16).