Home
October 29, 2011
Time Warner Cable, the second largest US cable operator, witnessed a net decline of 128,000 in residential video subscribers during the third quarter of 2011. This is better than year ago when the operator lost 155,000. The company also reported minor declines from Q2 in the numbers of DVR customers (-35,000), residential voice (-8,000), and digital video (-60,000) subscribers. However, the operator managed to add 89,000 residential high-speed internet subscribers and 31,000 commercial internet and voice subscribers, leaving the total number of customer relations almost flat (-8,000). The company also reported total revenue of $4.91bn, which is up 3.7% from a year ago but down $33m from the previous quarter. This consecutive-quarter decline was due to minor declines in residential (-$50m) and advertising (-$9m) revenues offset partially by an increase in commercial revenue (+$26m). Similarly, residential video, internet and voice monthly ARPUs have all declined slightly from Q2 2011.
Similarly, Cablevision's quarterly video revenue was up year-on-year but down $12m from Q2 to Q3 2011. Average monthly revenue declined almost $1 and advertising revenue fell $4m over the same period. Like Time Warner Cable, Cablevision's video subscriber losses improved from last year. The operators lost 19,000 video subscribers in Q3 2011, up from a year earlier when it lost 24,000 subscribers.
Last week, the two largest IPTV providers, AT&T U-verse and Verizon FiOS, saw slowing subscriber growth in their video segments. U-verse's net video subscriber growth slowed down to 176,000 in Q3 2011 down from 202,000 in the previous quarter and 235,000 in Q3 2010. Similarly, Verizon FiOS' net IPTV subscriber growth was 138,000, down from 184,000 in the previous quarter and 202,000 in Q3 2010.
Like most other cable operators, Time Warner Cable has been struggling with negative video subscriber trends for years. The company has been losing on average 80,000 video subscribers per quarter since the onset of the recession in mid-2007. Losses in DVR and digital subscribers are not new to TWC either. Digital subscribers declined in three of the past four quarters, and DVR declines began in Q2 2011. However, total revenue declines are completely new to this operator. While TWC has seen declines in premium and transactional VOD revenues before, Q3 2011 marks the first time that the company sees declines, albeit very small, in its core subscription revenues and monthly ARPUs. It is unclear if the company's ongoing push in broadband and commercial services will reverse the revenue decline.
Historically, Cablevision's subscriber trends have been stronger than Time Warner Cable's. However, the operator was hit like the rest of the industry with substantial basic subscriber declines during 2010. Cablevision improved this trend during Q3 2011, but it came at the cost of lower average monthly revenue due to low-cost promotional offers. Overall, the consecutive-quarter revenue decline was limited to advertising and video, whereas voice and internet revenue increased slightly.
In contrast, U-verse and FiOS are still growing their revenues and increasing their contributions to parent companies' bottom-line, which is typical of new comers. FiOS monthly ARPU increased two per cent from the previous quarter and U-verse's monthly ARPU was up 2.5 per cent.
The slower-than-usual subscriber growth, however, stands out. Both companies blamed the slowing growth on external factors, such as bad weather and Verizon's worker strike which lasted two weeks and caused a backlog of 100,000 orders according to the company. However, a drop of 123,000 in net subscriber growth year-on-year cannot be fully attributed to these factors, and may be a sign of the IPTV sector approaching maturity. Q4 results will confirm or disprove this trend.
Tags:
