WideOpenWest's "broadband-first" strategy drove results in the first quarter of the year, as high-speed Internet penetration continued to climb and pay-TV penetration continued to drop off the map.
WOW lost another 17,300 pay-TV subs in the period, dropping its total to 290,900. That left video penetration at 8.9% at the end of Q1 2021, down from 12.5% in the year-ago period, and down from 9.5% at the end of 2020.
Expect WOW's pay-TV numbers to fall farther. In February, WOW Chief Financial Officer John Rego suggested that the company's focus on higher-margin broadband service would lead WOW's pay-TV base to drop below the 100,000 mark within about three years.
Broadband remained strong, as WOW added 10,000 subs in Q1, ending the period with 823,800. Overall broadband performance, driven by sub gains and higher average revenues per unit, also led to record high-speed Internet revenues of $152.7 million in Q1 2021, versus $127.5 million a year earlier.
"Our broadband-first strategy drove our results again this quarter," Teresa Elder, WOW's CEO, said on today's earnings call.
Roughly 86% of new WOW customers in Q1 2021 were broadband-only, about the same as the previous quarter, and up from 66% in Q1 2020 – about the time WOW initiated its broadband-first strategy.
Some 88% of new broadband subs took speed tiers of 200 Mbit/s or more (WOW also offers tiers of 500 Mbit/s and 1 Gbit/s down), versus 12% who took speeds of 100 Mbit/s or lower (WOW's entry-level tier now starts at 100 Mbit/s downstream). ARPU climbed to $62.1 in Q1, compared to $57.70 a year earlier, driven in part by speed upgrades and new customers coming on board at one of WOW's higher-level speed tiers.
More focus on WOW! tv+ conversions
Though broadband is WOW's primary focus, the company is not out of the pay-TV business.
In addition to supporting a legacy "Ultra TV" offering using a platform from Enghouse, WOW has also introduced a new app-based IPTV service, called WOW! tv+, that is offered on Android TV boxes and mobile devices and delivers traditionally-sized channel packages. WOW has also teamed with MyBundle.TV on a system that helps customers determine which streaming services best fit their needs.
Most new WOW customers are pairing broadband with an over-the-top streaming service, Elder said.
Though customer take-up of the new WOW! tv+ offering remains "small" (WOW hasn't broken out that number), Elder said WOW is starting to be more "reactive" with respect to upgrading and converting legacy pay-TV subscribers to the new IPTV product, which, to date, has not been heavily promoted by WOW.
Looking ahead, WOW is forecasting total Q2 2021 revenues of $280 million to $283 million, with high-speed data revenues in the range of $154 million to $157 million.
For the full year, WOW expects revenues of $1.11 billion to $1.12 billion, with high-speed Internet revenues of $629 million to $632 million.
WOW expects to add another 3,500 to 5,500 broadband subs in Q2 2021, and between 28,000 to 32,000 for full 2021.
Elder also confirmed that WOW will participate in the FCC's Emergency Broadband Benefit (EBB) program, which will provide qualified consumers a discount of up to $50 per month toward broadband service, and up to $75 per month for households on qualifying Tribal lands. Qualified homes are also in line for a one-time discount of up to $100 toward the purchase of a laptop, PC or tablet, if they contribute more than $10 and less than $50 toward the purchase price.
WOW has studied the potential subscriber and financial impact of the program, but didn't disclose any specific guidance ahead of a signup period that's set to start May 12.
"We think it could be a significant number," Elder said, noting that the program might put some existing broadband households that qualify for EBB in position to upgrade their current speed tier.
- MyBundle.TV helps 'broadband-first' players stay in video game
- WOW expects to lose more than half its pay-TV base
- Podcast: MyBundle.TV coaches viewers on cutting the pay-TV cord
- WOW! extends Android TV-based service to nearly all subs
- WideOpenWest stops promoting its own pay-TV services online
— Jeff Baumgartner, Senior Editor, Light Reading