Hulu’s plan to create a skinny bundle collection of channels may have looked like a potential declaration of war on cable and satellite companies. But Charter CEO Tom Rutledge — who now controls Time Warner Cable’s former systems — says he’s unfazed.
Indeed, he’d like to make it easy for subscribers to add Hulu as well as Netflix and Amazon Prime — which other operators fear may encourage cord cutting.
Charter is “pursuing” efforts to integrate streaming services including the three leading ones “into our [user interface] to make it seamless to the customer,” he told investors today at the MoffettNathanson Media and Communications Summit.
Hulu’s controlled by major cable channel owners Disney, Fox and Comcast. “If they underprice what they already have” in deals with traditional operators “then someday they end up with less,”
And companies such as Charter could insist on price breaks — or simply drop channels. That would enable it to “lower your cost and prices and have that piece of your base that cares go somewhere else.”
The view reflects his confidence that the vast majority of customers will stick with the expanded basic bundle “with some nibbling around the edges.”
“Most people who buy Netflix buy cable or satellite,” Rutledge says. “It’s another channel, a premium service — and an inexpensive one.”
What’s more, the Charter chief likes how the services increase demand for his broadband service. Consumers judge it “from a video perspective, from speed — does my video work well?”
What about cord cutting — or not signing up in the first place? That’s a real phenomenon: Most of Charter’s broadband-only customers now don’t subscribe to any pay TV, a change from the days when the service was mostly for satellite subscribers.
But this isn’t about Millennials’ diminishing interest in traditional TV, Rutledge says. The change is that young adults move more frequently than they did in years past. “If you think of them as movers, a lot of their activity makes sense….People who live in inconsistent housing tend to have much lower penetration in video.”
The same isn’t true of broadband, which is deemed a necessity.
To secure FCC and Justice Department approval for the TWC deal, Charter had to agree not to tie broadband prices to usage for at least seven years. Rutledge says that’s no problem because he wasn’t planning to take that bath.
“When AOL was a per-usage service it wasn’t much of a product,” he says. “When it went all-you-can-eat, it exploded….There are better ways to sell the product.”
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