TWC's Marcus: Streaming strategy is about getting rid of set-tops, not skinny bundles

Describing the streaming video service his MSO is currently testing in New York, Time Warner Cable (NYSE: TWC) Chairman and CEO Rob Marcus emphasized the ability of the service to dramatically reduce the company's spending on set-tops and truck rolls.

At the same time, Marcus seemed to downplay the notion that the service will be an over-the-top play targeting millennial-aged consumers.

"As we move forward and what we're trialing with this beta in New York, is we're going to move that TWC TV capability toward a full video offering that, in fact, could be substitutional for the traditional set-top box-based video product," Marcus said. "And where we're headed is the ability of customers to access the complete video product without having to rent a set-top box from us, whether they use a Roku or they use ultimately another IP enabled-device."

After speaking to a TWC representative later for clarity, CBS News reported that the service is an extension of TWC's current TV Everywhere app, which lets customers use a Xbox 360/One game console or Roku streaming device to view TWC video on a second television. Unlike the TV Everywhere app, the service being beta tested allows customers to stream their cable video to their primary TV, no set-top required. 

TWC is providing a Roku 3 with the service, but it's unclear as to whether users will have any DVR or on-demand viewing capability. That's currently a restriction to Xbox and Roku viewing on the TWC TV multiscreen app. 

"You can simply type in your username and password, and you have video," Marcus said. "And that's certainly a good guy in terms of the economics of doing the business. It's certainly a less capital-intensive model, in that customers will likely bring their own devices. And that will reduce the CPE capital requirements for us," he added. 

TWC is conducting this beta test as Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR) experiment with streaming video services of their own. And of course, Dish Network (NASDAQ: DISH) has already been out in the market for nine months with its $20-a-month Sling TV service. Both Dish and Comcast have been explicit about their goals -- they are targeting millennial-aged consumers with a stripped down, low-cost video service that appeals to a consumer who only purchases broadband. 

Marcus took pains to differentiate what TWC is working on. 

"Let me make very clear, our beta, our IP video offering, is not over-the-top," he said. "I know it's common to us to equate IP with over-the-top. In fact, this is a video service that we're delivering over our facilities, not over anybody else's. Over time, there may be a TV Everywhere component to this, just like there is one to our traditional video offering. But what we're talking about here is a managed video service over our network, so just to get that clarification out of the way."

Marcus also re-iterated on numerous occasions that the offering will not feature a paired-down program offering. "What we've got to do is ensure that we have a complete channel lineup," he said. 

"I'd note this again this quarter, and this has been true for a couple of quarters now, about 82 percent of our gross video connects actually took our Preferred TV product. So, for all the talk about skinny bundles, we're doing pretty well offering a full video product," he added. 

For more:
- read this Seeking Alpha transcript
- read this CBS News story

Related articles:
TWC loses only 7,000 video subs in its best Q3 performance since 2006
TWC's Marcus: '82% of our video connects in Q2 took the fattest of the fat bundle'
Report: TWC's new streaming-only skinny bundle for NYC starts at $10/month, offers 20 channels