Time Warner Cable (TWC) is set to test a new Internet TV service in New York City this week in a bid to stop hemorrhaging cable subscribers. Designed for users who only signed up for Internet service, TWC will be offering a “Starter” package at an additional $10 per month that covers all broadcast channels. Interestingly, TWC will also be giving out Roku 3 boxes for free to these customers, truly bringing TV into the OTT era.
In August, the cable industry suffered a massive stock sell-off triggered by the increasing momentum of cord-cutting. In addition, a new report from Forrester Research found that cord-nevers – people who have never subscribed to a traditional pay-TV service – now make up 18% of the U.S. population. The study also estimates that by 2025, half of all TV viewers under age 32 will not be paying for cable TV subscriptions. Therefore, it makes perfect sense for TWC to start experimenting with selling TV packages as an add-on to its internet services in order to adapt to changing viewer behavior.
Currently, Dish Network’s Sling TV remains the only widely-available Internet TV service on the market. Comcast recently launched its OTT service Stream, which allows subscribers to stream select TV content on mobile devices only, while Cablevision started selling “cord-cutter” internet packages that come with antennas and subscriptions to Hulu and HBO. But with Apple’s TV subscription service set to launch in 2016 and now TWC jumping onboard, the battle for retaining TV subscribers and, more importantly, selling TV packages to cord-cutters and cord-nevers, has just begun.
Last summer Fanhattan showcased a Fan TV box that would put cable TV in direct competition with Internet streaming services, while simultaneously allowing cable TV providers to sell the box itself. Now, Fanhattan has officially found a partner in Time Warner Cable, who will sell their streaming boxes for $99 to subscribers – and they’re already available for pre-order. The box will have live TV and video on-demand streaming from TWC, plus services like Redbox Instant, Target Ticket, Crackle, and Rhapsody. There are more plans to add services over time, but for now the big names like Netflix and Amazon have been left off of the list. Those omissions will allow some breathing room for Roku, Apple TV, and the Amazon Fire TV, but it seems likely that Time Warner will try to break into the cordcutter market as swiftly as possible to keep its customers paying for cable.
Thought the recent net neutrality rulings wouldn’t have rapid ramifications? Think again. Today, Netflix and Comcast announced a deal that would see Netflix pay the ISP to remove a bottleneck that slowed the video provider’s traffic. The deal is designed to provide ideal capacity for Netflix’s service, which has seen a dip in service after the landmark net neutrality ruling which allowed ISPs to throttle traffic. Nevertheless, Netflix now has a long-term agreement in place with Comcast – and likely, by extension after their merger, Time Warner – that will see their traffic issues fixed. Not coincidentally, Verizon has released a statement that they expect Netflix to pay them, too, if they want to see an improvement in service. The key, for many, is whether these new costs will be passed on to consumers, and if this happens whether those consumers will balk at higher prices.
Online TV mainstay, Hulu will not be sold despite months of bidding. Instead, their current network shareholders, including 21st Century Fox, NBCUniversal, and The Walt Disney Company have contributed $750 million to bolster the service. Hulu either did not receive high enough bids or believes they have significant long term value. With that said, Hulu’s network partners often host their videos on their own sites as well, thus cannibalizing Hulu views and ad sales.