Charter Communications has launched its first App Store as part of a big push to promote its broadband and video services as offering not just cable channels but easy access to an array of streaming platforms.
With its “Seamless Entertainment” campaign, fronted by Tracy Morgan in a series of cheeky spots, Charter aims to position itself much as Amazon Prime Video and Roku do with subscribers as being their portal to subscriptions to Netflix, HBO Max, Disney+, Paramount+ et al.
Charter hosted an event Oct. 9 in Manhattan as part of Advertising Week to show off the new features and positioning of its pitch to customers. The goal is to convince consumers that Charter can be one-stop shopping for the strong broadband service required to watch all those bandwidth-hungry streamers. It is also looking to explain the complicated concept that Charter customers who subscribe to traditional TV packages at present also have access via authentication to key streaming apps. That includes the ESPN app that Disney launched in August.
The ESPN streamer features as a vast amount of games and shows that do not run on linear ESPN. But anyone who pays for linear ESPN via a traditional Charter cable package is able to access the streaming app at no extra charge. The problem for Charter and ESPN is, most traditional cable consumers aren’t aware of this.
The landscape of how TV packages are bought and sold has changed immeasurably in the last 15 years, since Netflix revved up its streaming menu with acquired and original series. Charter’s push is part of a gradual industry shift back toward bundled packages of entertainment from multiple programming sources. Cable operators such as Charter and its biggest rival, Comcast, are working to fix the customer service mistakes of the past in order to sell themselves as the best value option for consumers.
Chris Winfrey, president and CEO of Charter, sees the App Store as being a funnel for bringing consumers to a more expansive Charter-provided video and broadband package, once they realize the cost of paying for streaming apps a la carte. In every way, the pay TV business is moving back toward bundling.
“We have a distribution platform that’s much larger than our video subscribers, because the broadband connectivity service that we provide that provides a couple of things. One is the ability to think about the video business a little differently. But also, we have 30 million broadband customers, a majority of which don’t have video anymore, and that gives us an opportunity to go sell a la carte. To the much broader base of broadband customers, we will be selling AMC+, ESPN, Paramount+ and HBO Max,” Winfrey said. “Whatever the customer wants to have, we can provide it in that video app store, and maybe, ideally, one day they say, look, it’s adding up to a lot of money. For $100 I could get video included as part of that.”
At the Spectrum event, Winfrey was pressed during a Q&A with CNBC reporter Alex Sherman about the miscalculations over the past decade and a half that led U.S. cable operations to lose some 35% of their customers. Winfrey, a 15-year Charter veteran who was upped to CEO in December 2022, pointed to the sea change in Hollywood’s content licensing strategies as streaming platforms came along with big budgets for acquired and original series. It happened gradually, but it hurt both programmers and distributors in the long run.
CNBC’s Alex Sherman, Charter’s Chris Winfrey, AMC Networks’ Kristin Dolan and ESPN’s Jimmy Pitaro
“The idea that you could sell content that was unprotected from an authentication standpoint, with no advertising, with no brand, [and thinking] that was going to be incremental subscribers was a big
mistake,” Winfrey said. “And once that happened, and you started to bring entities that for long periods of time could sell your content at a discounted rate and have a loss for a long period of time, the cat was out of the bag.” Winfrey noted that Disney et al “started to naturally chase the direct to consumer, reclaim back the content.” And the fact that Netflix was a darling of Wall Street encouraged the spending boom that has also up-ended Hollywood.
Cable still has an image problem, Winfrey acknowledged, but now they’re the ones drawing more heat from investors because their broadband service remains fundamental to residential and business customers. In essence, Hollywood has learned the benefits of distribution partnerships versus going it alone with direct-to-consumer divisions that racked up enormous startup costs.
“And now we look pretty good, because we can put it back together in a way that I think is good for the consumer, actually does the best that we possibly can for the programmer’s profitability as well, and gets us the value utility,” Winfrey said.
The Charter presentation also emphasized enhancements made to the voice remote control service that Charter has developed in tandem with Comcast. Charter and Comcast are also partners in the Xumo Stream Box platform designed to make it easy for consumers to shift between linear and streaming platforms.
Also joining Winfrey at the event were ESPN chief Jimmy Pitaro and AMC Networks CEO Kristin Dolan. Both AMC and ESPN have worked closely with Charter in recent months to reach carriage deals that incorporate apps such as Disney+, Hulu and ESPN and the AMC+ premium drama service. Programmers have to bring streaming apps into the mix to bring value to cable distribution partners. The days of securing big automatic rate increases with every new cable carriage deal are long over.
The conversation among Winfrey, Dolan and Pitaro underscored how layered the pay TV marketplace has become with the introduction of more options including the rise of free streaming channels and apps. Whether small (AMC) or large (Disney), programmers need the support from MVPDs because the ability to bundle disparate services and content from multiple providers makes for a more compelling consumer offering.
“There’s two different customers, a streaming-only, or broadband-only, customer that takes streaming products is one type of customer, and then somebody that still watches traditional linear for the most
part. The Venn diagram is not as big as you would think,” Dolan said.
Pitaro praised the “seamless entertainment” initiative as the right approach at a moment of rebuilding for the TV eco-system. The end result of a tough negotiation that included a nearly two-week blackout of Disney channels on Charter in 2023 was a much closer working relationship between the two.
Even as ESPN went standalone for the first time, “we also decided internally that we were going to remain committed to the pay TV environment, and the best way to demonstrate that commitment was by adding value once we launched,” Pitaro said. “We made all of the product enhancements within the ESPN app available to charter subscribers. So fire up the ESPN app, you authenticate it and and you have access to deeper personalization, all the interactive features that we now have within the app, like fed fantasy, stats integration, commerce integration, all that is available to the Charter subscriber. And so that’s our way of adding more value to that, to that environment.”
Here’s one of the Tracy Morgan spots that aims to translate Spectrum’s pitch to consumers:
