CenturyLink Preps for OTT Plunge

Hard on the heels of similar launches by Hulu, YouTube and DirecTV, CenturyLink intends to introduce yet another skinny bundle OTT video service in the US this summer.

CenturyLink Inc. (NYSE: CTL), the third-largest US telco by subscribers, said it will start rolling out the still unnamed service this summer after conducting technical trials in four undisclosed markets. It then plans to expand the service to its 12 million or so homes throughout the US by the end of the year. (See CenturyLink Embraces OTT Video.)

Speaking on the company's first-quarter earnings call late Wednesday afternoon, Maxine Moreau, president of consumer markets for CenturyLink, said the new service will deliver a "skinnier bundle" of programming than its full-fledged IPTV bundle, known as Prism TV, as well as offer add-on packages for a higher monthly price. But she did not reveal any pricing, programming or packaging details of the new OTT service, noting that all these elements are still being evaluated in the market trials.

So the big question is: How will CenturyLink differentiate its new OTT entry from the various other skinny bundle services increasingly cluttering the market? Just yesterday, for example, Hulu LLC launched the beta version of its new skinny-bundle streaming TV service, called Hulu Live. (See Hulu Live Launches in Beta.)

Moreau and other top CenturyLink executives on the earnings call did not address that question yesterday. But Moreau did seek to dampen industry speculation that Centurylink might use the launch of the new OTT service to phase out Prism TV, stating that the company's video strategy calls for offering "multiple options for customers, based on their preferences and needs."

The push into the OTT video market comes as CenturyLink is running into the same problem with its linear video service that most other US pay-TV providers are experiencing -- either subscriber and revenue declines or, at best, minimal growth. In the first quarter, for instance, the big telco reported that its "other strategic" consumer revenue, which primarily consists of video revenue, slipped to $103 million. That's down 3.6% from $107 million in the year-earlier period.

CenturyLink blamed the revenue decline on higher satellite TV contract charges (the telco offers DirecTV in some markets) more than cancelling out Prism TV revenue growth. But, in a possibly telling note, the company, which ended 2016 with 325,000 IPTV subscribers, did not break out its Prism TV subscriber and revenue numbers this time around.

Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.

Perhaps more ominously, CenturyLink's consumer broadband revenue also dipped on a year-over-over basis, slipping 0.9% from $667 million in Q1 of 2016 to $661 million this year. The company blamed that decline simply on "fewer subscribers," reporting that it now has about 5.95 million data customers, down about 111,000 from a year ago.

CenturyLink executives aim to foster new data subscriber growth by continuing their coordinated deployment of more fiber lines and higher broadband speeds, including 1-Gig services. They noted that 3.5 million of their footprint homes can now get 100 Mbit/s or faster service, up from 2.6 million homes a year ago, while 9 million can now get 40 Mbit/s or higher, up from 8.3 million a year ago. Plans call for increasing both totals substantially by the end of 2019.

"We think we can turn the strategic business around," said CenturyLink President & CEO Glenn Post. "We think we'll see ARPU increase there and we'll take market share away."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

KBode 5/8/2017 | 4:36:52 PM
Re: CL I really have not yet seen that telcos are particularly good at disruption or content platforms. I would not be particularly surprised to see CenturyLink founder here, unless they lean on zero rating to give their own platform a leg up (and even then, there's an awful lot of competition from much more skilled players coming down the road). That said, it's good they're at least trying to get out ahead of this looming market evolution.
danielcawrey 5/5/2017 | 1:07:56 PM
Re: CL The service that is going to win will be the one with the most selection with the lowest cost. It's that simple. 

So many players are entering, but only few will win. 
sarcher60555 5/5/2017 | 10:37:52 AM
Re: CL Exciting. Cant wait.  Oh is there another new release on Netflix?
Joe Stanganelli 5/4/2017 | 3:24:38 PM
CL I had an interview w/ a CL exec the other day.  When we got to the subject of video, he made clear that there was a lot of stuff that he couldn't comment on -- while also making clear that some exciting stuff was coming down the pike.
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