CenturyLink is experiencing losses with its Prism IPTV product and plans to replace it with OTT service in the second quarter.
“Our [OTT] trial is getting really strong reviews right now … We have deemphasized [Prism TV] and are moving more toward the over-the-top product and also focusing more on the broadband offerings we have versus the video.” said CenturyLink President and CEO Glen Post, speaking to investors on CenturyLink’s fourth-quarter earnings call Wednesday.
CenturyLink’s operating expenses rose 2.4% to $15 million in the fourth quarter, primarily driven by higher Prism TV content costs.
“If you look at our Prism product … we've talked about content costs have really gone out of sight the last couple of years,” Post said. “If you look at the margins, sometimes actually negative margins. We have to make a truck roll and the cost of provisioning really makes it difficult from a returns standpoint for really driving the kind of returns we expect.”
With over-the-top product, he added, “we don't have to make a truck roll. We have much wider availability due to lower bandwidth requirements of over-the-top. We have network-based storage for DVR. We'll have local channels to help distinguish that product.”
Also speaking Wednesday, Maxine Moreau, executive VP of global operations and shared services for CenturyLink, said the company was conducting OTT trials in four markets. “We plan to launch those markets in early second quarter, expand that midyear and then further expand it throughout the year,” she added.
Post, meanwhile, kept open the possibility that CenturyLink could ditch its own internally developed OTT platform and become a licensed reseller of AT&T’s recently launched DirecTV Now virtual MVPD service.
“On the over-the-top, we're looking at every option,” he said. “If we can get a better deal or we can get some of our content cost down and get the same type of service available with a DirecTV Now, we'll certainly take a look at that. We are talking to all of our service providers, looking at every possibility there.”