x
Multi-screen video

Cable Embraces Skinny TV Bundles

In what may be the biggest surprise of 2015, cable companies are breaking up the bundle and committing to skinnier TV packages.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) today launched Stream TV in Chicago, its second market after Boston where the service made its debut last week. Stream TV pares down Comcast's traditional video service, offering only the major broadcast networks plus HBO, but making them available over any Internet-connected device. Stream also includes a cloud DVR feature and is significantly cheaper than regular cable TV, coming in at a price of just $15 per month. The service is expected to hit Seattle next and spread to the rest of Comcast's footprint in 2016. (See Comcast 'Stream' Joins OTT Flood.)

But Comcast isn't the only cable company testing out skinny TV. After at least one Charter Communications Inc. subscriber last month reported getting promotional materials for a new Spectrum TV Stream service, Charter made its skinny bundle efforts a little clearer in St. Louis, Mo. this week. According to the St. Louis Post-Dispatch, Charter sent the news outlet an email explaining that it's trialing a new streaming video offering in St. Louis and other markets with customers that subscribe only to Internet or Internet and phone service.

From earlier reports, Spectrum TV Stream costs $13 per month for the major broadcast channels plus HBO and Showtime, or $20 per month (up to $27.50 with taxes and fees) for 16 additional networks, including Discovery, ESPN and FX. (See Charter Skinnies Down With New TV Bundle.)

Aside from reaching out to the Post-Dispatch, Charter has been remarkably close-lipped about its skinny bundle strategy and roadmap. A company spokesperson was unwilling to comment on the record, but did point to a statement given by CEO Tom Rutledge on Charter's latest earnings call: "We test, occasionally, new products and we test price points, and some of the stories you've read about what we're doing are as a result of tests," said Rutledge.


Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.


There are fears in the industry that skinny bundles will have a negative impact on pay-TV revenues, a concern that appears to be borne out by Verizon Communications Inc. (NYSE: VZ), which blamed lower earnings last month partly on "an increase in customers right-sizing their existing bundles." (See Skinny Bundles Sock FiOS Video Revenues.)

However, operators do have an opportunity to build incremental revenue on top of skinny bundles by offering add-ons, including supplementary channels, video-on-demand content and DVR features where they're not already included in the base package. Skinny TV is also a promising gateway product for customers who don't want to pay a high monthly fee upfront, but are open to being seduced into a larger commitment later with compelling content and services.

While the financial impact of skinny bundles is still uncertain, the risk of not competing with lower-cost online video services like Netflix and HBO Now is too big to ignore. That analysis is what makes skinny TV a gamble that cable companies are now willing to make.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

steve q 11/19/2015 | 9:52:45 PM
Re: Skinny competitiveness I see this as something that Verizon fios should have moved to b4 Comcast moved into Boston. Verizon has to come up with a plan for those customer that only use the internet as a way to watch Tv. And in the same way as what comcast has. Verizon has a cloud company that can provide those that like to watch and use a dvr format a way to still watch Tv.
inkstainedwretch 11/19/2015 | 2:45:28 PM
Skinny competitiveness The option of skinny bundles is going to make the calculus of cord-cutting even more complex, especially vis-a-vis Hulu. Some cord-cutters make do with a combo of Netflix and Hulu. Skinny bundles with the all of the major broadcast networks would make a subscription to Hulu less appealing -- but only if you can get access to full seasons (or if you truly love CBS's lineup [missing on Hulu]). _____ I'm guessing Hulu saw the skinny bundle coming, and that's why it's branching out into offering feature films -- not only to compete with rather than just complement  Netflix. ________ As for skinny bundles, they become more competitive if the providers let subscribers add premium channels, one by one, on an a la carte basis. --Brian Santo
msilbey 11/19/2015 | 12:24:01 PM
Re: The timeless art They definitely aren't getting better margins, but they're not losing money on these packages either. Skinny bundles are a good entry point, and a potential way to keep customers who might otherwise drop video entirely.
mendyk 11/19/2015 | 12:13:50 PM
The timeless art "...open to being seduced into a larger commitment..." Nice turn of phrase. Do skinny bundles result in better margins for the operators, or is this simply a way to squeeze down to a lower price point?
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE