As its number of video subscribers continues to slide, Cablevision wants to make it clear that broadband is the future of its business. Combined with new over-the-top partnerships and flexible video packages, Cablevision believes Internet connectivity is the key to financial growth.
"Our philosophy with this is essentially that we think that video is akin to the eggs and the milk in a convenience store,” said CEO James Dolan on the Cablevision Systems Corp. (NYSE: CVC) first quarter earnings call. "You have to have it, but you don't make a lot of money on it. Now connectivity is a whole other basket. It's more like the soda and chips aisle. And if you provide great connectivity -- because it provides great value to the consumer -- you can differentiate yourself, and you can charge more, and the margins are good on it."
Cablevision's connectivity strategy was on full display in the first quarter of the year. The company announced several new product packages bundling Internet service with over-the-top and over-the-air video options. After becoming the first service provider to offer HBO Now, Cablevision introduced two cord-cutter packages combining Internet access with a free digital TV antenna. It followed up by announcing a partnership with Hulu LLC , although the company hasn't provided any details on timing or pricing yet. (See Cablevision 'Cord Cutters' With New Package and Cablevision Embraces OTT With Hulu.)
CTO David Dibble also hinted on today's earnings call that Cablevision is likely to expand its video service onto more platforms. When a financial analyst questioned whether Cablevision would consider creating an app for Roku Inc. boxes, Dibble replied, "There are a number of device manufacturers out there now with interesting product offerings, and you'll see something from Cablevision hopefully in the not too distant future that capitalizes on that without specifically stating whether it's Roku or somebody else."
In the quarter, Cablevision lost 28,000 residential video subscribers and 14,000 voice subscribers. On the other hand, it gained 7,000 high-speed data customers, reducing overall subscriber losses to 6,000. Average monthly revenue per user climbed nearly 5% to reach $155.34, partially fueling revenue growth for the business that increased 2.4% compared to a year ago to $1.452 billion.
Cablevision's Lightpath business services were a particular bright spot for the company. Net revenues increased 5% to $91.1 million in the first quarter based primarily on sales of Ethernet services. Net revenues for the “Other” category in Cablevision's report -- which consists primarily of income from Cablevision's media properties -- rose slightly, up .4% to $81.8 million.
Executives on the earnings call also highlighted a growing focus on collecting set-top data and partnering with other cable MSOs to analyze subscriber viewing habits. Cablevision announced just last week a new product called Total Audience Application (TAPP), which is designed to automate planning for addressable and other targeted linear television ad campaigns. Three major advertising agencies have already signed on to trial TAPP, including GroupM, Horizon Media and Starcom MediaVest Group . (See Cablevision Unveils Ad Planning Tool.)
Little detail was given on the progress of Cablevision's other recent experiment, the launch of its WiFi-first phone service Freewheel. However, executives did say that usage is up, with subscribers making and receiving more than 20 calls per week, and sending and receiving more than 70 text messages. (See Cablevision's New WiFi Try – Freewheeling Enough?)
— Mari Silbey, special to Light Reading