Charter’s second-quarter video revenue didn’t fall, but it didn’t grow much either. That’s partly attributed to more of the provider’s customer choosing cheaper video plans.
Charter’s residential video revenues rose 0.6% to approximately $4.4 billion. The company said the slow growth is happening as more of its video subscriber base are opting for Choice and Stream, the operator’s lower cost streaming TV packages.
Charter CEO Tom Rutledge said the cost of the traditional TV channel bundle is “very expensive,” something he attributed to rising content costs, and that the high price has driven price-sensitive consumers toward Charter’s cheaper options.
“There are a lot customers that can’t afford it…and so they’re downgrading to Stream both from existing packages and going there on the increment. And, it’s really to save money. Most consumers would like to have it all,” Rutledge said.
Choice is a $24-per-month package that starts with a base of broadcast channels and lets consumers pick an additional 10 cable channels from a list including AMC, CNN, ESPN, FX, TBS and more.
Charter is trying to be smart about marketing its lower cost video services to price-sensitive customers.
“We’re generally pretty good at targeting that but it’s not a perfect science,” said Rutledge. “So, there’s a tension between our strategies of trying to sell full packages and trying to sell Stream at same time to those who are income-constrained. We’re weighing the marketplace and trying to be responsive to consumers’ video needs.”
Rutledge went on to accuse programmers of destroying the price value of programming by raising content costs that alienate a lot of pay TV subscribers. He said programmers aren’t realizing price increases in their revenue lines because consumers have so many options to get that programming for free through over-the-air antennae, TV Everywhere apps and multiple streams available through virtual MVPDs.
“There’s absolutely no security on the product whatsoever. That changes the price-value relationship to customers and makes it impossible to raise prices and generate revenue,” said Rutledge. “My wish would be that the content industry would manage their content and content rights to their own benefits instead of pushing through price increases.”