Triple-play customers have long been considered the gift that keeps on giving, with subs who take video, voice and data seen as less likely to churn and big revenue generators. But Time Warner Cable threw that notion out the window when it kicked off distributors’ first quarter reporting. Last year’s aggressive 3-bundle promo resulted in the highest quarterly sub net adds the MSO had seen in years, but that wasn’t necessarily a good thing. “In large part, we were attracting discount seekers who are more likely to churn quickly,” TWC pres/COO Rob Marcus told analysts. “In many cases, we caused customers who didn’t need or want phone to take a triple play offer just to get the low triple-play rates.” It was a bit shocking for an industry that has long held triple-play subs up as the ultimate, high-value customer. But are other cable companies and telcos seeing similar trends? It doesn’t sound like it. Is TWC an anomaly or just the first to have trouble? Here’s a breakdown of how MVPDs view the triple play:
Time Warner Cable: Having sounded the triple play discount alarm, the MSO took on less triple-play sign up in 1Q after re-focusing its packages to better suit customer needs. It did drive more double- and single-play sign-ups. That’s why TWC posted a YOY decline in PSUs. However, Marcus noted during a call with analysts that it doesn’t necessarily mean a decline in revenue because a customer who doesn’t take phone may opt to spend money on incremental Internet speed or other ancillaries.
Comcast: Unlike TWC, Comcast concentrated on converting single and double-play subs to a 3-product bundle. Triple play sell-in was up 8% YOY, with phone up 29% in 1Q (a stat the MSO attributes to triple-play growth). “We’re getting a higher triple-play sell-in, and triple-play customers churn at a significantly lower rate than single play customers,” said Comcast Cable pres Neil Smit during Comcast’s May 1 earnings call. About 41% of the MSO’s customer base takes a video, phone and HSD bundle.
Charter: Tom Rutledge & Co also continue to see the benefit of triple play, with management reporting that the 3-product customers tend to spend more than the $90 promotional offer. The average entry ARPU for new triple-play connects is $120, according to CEO Rutledge. How big of an emphasis has Charter placed on the triple play? Sell-in rates in 1Q improved more than 75% YOY. But the MSO did note that there was churn in 1Q from low-end triple-play offers that the company had made in the past that rolled off in 1Q. But if it’s packaged right, Charter sees the triple play as something that makes it stand out. “We believe that the product is valuable, that consumers recognize it and it can’t be replicated by our competitors easily,” Rutledge said.
Verizon: Two-thirds of FiOS customers are in a 3-product package, and there are no signs of the telco backing down. In fact, during its 1Q earnings call, execs focused on the quad play and its partnership with cable. “I think that this is very important, because as we look at how do we innovate and bring content in and outside of the home on a seamless perspective, this is where that all comes into play,” said evp, CFO Fran Shammo.
Cablevision: Count Jim Dolan in the camp that continues to see value in the triple-play package, as he said it continues to be one of the primary purchasing options for customers. But overall Cablevision has made a point to be “disciplined” in the pricing and packaging of services. In December, it announced the first increase in its HSD service since the product’s inception. It has also rolled out a $3/month sports surcharge to most of its footprint.
AT&T: AT&T U-Verse had strong numbers in 1Q, adding a record 731K broadband subs and 232K video customers. “We still drove revenue growth and we still are getting very good revenues on the triple-play on the consumer side,” said svp, CFO John Stephens. It’s hoping U-Verse upgrade project, dubbed Project VIP, helps even more when deployments begin later this year. “We had record high-speed broadband net adds along with increasing U-Verse video gains. We continue to gain market share in areas where we offer U-Verse and Project VIP expands those areas even more,” Stephens said.
Suddenlink: The 3-product package continues to grow. Bundled residential customers represented nearly 65% of total residential relationships at the end of 1Q, with most of that attributable to growth in the triple play. Triple-play relationships grew to 25% of total customers relationships from 23.9% a year earlier. Growth of 15,500 triple-play customers from 1Q12 represented an increase of 4.7%.