uploads///Telecom Charter Q Pay TV Subscribers Loss

Why Charter Reported Video Customer Losses in 2Q17

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Charter’s video subscribers in 2Q17

After its merger with Time Warner Cable, Charter Communications’ (CHTR) has nearly 16.7 million video customers and has become the third-largest pay-TV provider in the US, after Comcast (CMCSA) and AT&T (T).

In 2Q17, on a net basis, Charter lost 90,000 video customers, as compared to 152,000 net losses in 2Q16, primarily due to losses from Time Warner Cable markets.

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Pay-TV providers losing subscribers

OTT (over-the-top) video streaming services deliver content directly to users over the Internet as an alternative to signing up for a cable or satellite connection. Hence, OTT offerings slow pay-TV customer momentum due to cheaper online alternatives. This phenomenon is generally known as “cord cutting.”

Users are increasingly preferring OTT to high monthly satellite and cable bills. According to Digitalsmiths, around 37.1% of pay-TV customers pay above $100 per month to their service provider. Netflix (NFLX), Dish Network’s (DISH) Sling TV, and Sony’s (SNE) PlayStation Vue are the leading firms in the online video streaming space.

Despite reporting thousands of pay-TV customer losses, Charter’s management has highlighted that the carrier hasn’t seen any meaningful value in OTT and notes that it has no immediate plans to join the streaming video bandwagon. The company observed that OTT video is cannibalizing pay-TV customers, but it is keeping its options open. If the company sees some meaningful value, it may consider challenging its competitors with its own video streaming service.

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