Cablevision CEO: Bundled TV Subs to Decline as Much as 25%16 Jun, 2015 By: Erik Gruenwedel
Move over video. Connectivity, including high-speed Internet and Wi-Fi, is the primary subscriber growth driver for multichannel video program distributors, Cablevision CEO James Dolan told an investor group.
Speaking June 16 at the Guggenheim 2015 TMT Symposium in New York, Dolan said monthly data and connectivity usage at Cablevision has accelerated 123% over the past two years, including 121% on a monthly basis, with Wi-Fi usage up 60%.
Indeed, The Wall Street Journal analyzed Nielsen data last year and found that the top 40 most widely distributed channels such as CNN, ESPN and USA had lost an average of 3.2 million subscribers over the previous four years.
“There’s a real opportunity there for cable [selling connectivity],” Dolan said.
Indeed, Manhattan, N.Y.-based Cablevision, which lost 146,000 video subs in the most recent quarter, has been noticeably bullish toward over-the-top video, inking direct-access agreements with HBO Now and Hulu Plus, among others.
In addition, Cablevision has rolled out cord-cutter initiatives priced from $39.99 a month enabling access to broadband, telephone and 70 TV channels via digital antennae — a platform similar to the defunct Aereo TV. Dolan said recent launches of standalone OTT video services such as CBS All Access underscore the marrying of free digital airwaves with licensed content.
“It’s responsive to that part of the customer base that wants [not to subscribe to pay-TV],” Dolan said. “The onus moves from ‘the bad cable company gauging all this money out of me,’ to allowing [the consumer] to decide how much [they] want to spend.”
The CEO said the transition toward OTT video is due in part to the shrinking margin around pay-TV. He said data and connectivity is outperforming video 7-1 in terms of profit to Cablevision.
Dolan said a new generation of consumers predicated to watching video on a portable device and computer will contribute to a 20% to 25% decline in the bundled channel market.
The executive said niche channels with lower consumer appeal that have piggybacked on the traditional cable bundle will have a hard time surviving in the OTT world.
“[They’re] not essential anymore,” Dolan said.