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Time Warner Cable Moving Away From Cable

29 Oct, 2015 By: Erik Gruenwedel

Pay-TV operator envisions broadband TV app replacing set-top box distribution

Time Warner Cable may be the No. 2 cable operator behind Comcast, but it is turning its back on the cable technology that delivers its service into most subscriber homes.

TWC’s beta-launch of a multi-channel streaming video service (TWC TV) in New York via Roku 3 media device is a new strategy that aims to replace the traditional set-top box and related service costs, CEO Rob Marcus told analysts.

In effect, TWC is the first cable operator actively seeking to replace cable distribution with broadband.

Speaking Oct. 29 on the company's fiscal call, Marcus said the TWC TV app is not an over-the-top video service, but rather subscription streaming video delivered exclusively over proprietary broadband channels. 

“When we launched the TWC TV app, the goal was to create an offering that was complementary to our traditional video product,” Marcus said. “As we move forward with this beta trial, we’re going to move TWC TV to a full video offering that could in fact be substitutional for the traditional set-top box-based video product.”

Currently, TWC TV users access the service through a Roku 3 player included in the trial. Marcus envisions subscribers ultimately accessing the service through their own media player. Indeed, Charter Communications, which is attempting to gain regulatory approval for its $55 billion acquisition of TWC, just launched a broadband-only SVOD service dubbed Spectrum TV that includes a Roku 3.

Marcus said that to fully integrate TWC TV, it must still meet provisions of the Telecommunications Act of 1996 that mandate emergency alert functionality and closed captioning, in addition to billing, expense management and related customer issues.

The CEO said TWC TV must also offer a complete channel line-up to lure and retain subscribers, in addition streaming video in HD, not standard-definition resolution.

“We need to make sure that’s in there,” Marcus said, adding that over time additional features would be incorporated to make TWC TV indistinguishable from traditional video, including offering tiered streaming products as it currently does in cable.

“We’re big fans of customer segmentation [and] giving customers choice,” Marcus said.

The move toward SVOD is largely a result of current pay-TV consumer trends, which TWC has spearheaded.

Time Warner Cable in recent years has been a poster child for declining video subscribers, shedding more than 3.7 million subs in the past two years. That sub loss narrowed to just 60,000 in the third-quarter (ended Sept. 30) to a base of 10.76 million subs, compared with 10.82 million during the previous-year period.

Marcus attributed the reduced video sub loss to simplified pricing plans and product offerings. At the same time, he said 82% of current video subs have opted for premium channel bundles.

“So, for all the talk about skinny bundles, we’re doing pretty well offering a full-video product,” he said.

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