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How Will Time Warner Respond to Online Television Trends?

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Time Warner’s view of online television services

Online television services are becoming increasingly popular in the United States (SPY). Besides Hulu launching its online television services, Alphabet (GOOG) has also launched its YouTube TV. Recently, Hulu’s online television service, Hulu Live, extended its services to new devices like Amazon (AMZN) Fire devices. YouTube TV is also extending its presence in more markets in the United States, while Netflix (NFLX) has already surpassed 50 million members in the US.

Time Warner (TWX) considers the proliferation of online television services as a rising revenue generation opportunity for the company. The company also believes that the rise in online television services could indicate higher demand for cheaper skinny bundles with quality content.

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Time Warner believes that the rising number of online television services could also result in higher affiliate fees for the company. Currently, 90% of Time Warner’s affiliate fees come from the top five network brands of its Turner business. As a result, according to TWX, even if four or five of its network brands are included in these packages, it could result in higher affiliate fees.

Popularity of online television services

Video streaming services are becoming increasingly popular as viewers prefer to watch content online. The rise in online television services has meant that viewers are getting a virtual skinny bundle to watch content across different genres and of their choice.

A major reason for this growth in viewing content online has been that it’s cheaper to subscribe to an online television service like Hulu Live than to pay for cable. While the Hulu Live service is priced at $40 per month, cable bills can average between $100 to $150 per month.

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