Charter or Spectrum may have grown after acquiring Time Warner Cable (TWC), but if you pull the camera back you will see that the company is still losing customers. In fact, they lost 100 thousand customers in the most recent quarterly report. And Charter (CHTR) is not alone. The cable television industry is transforming. Today it is in disarray. Cable TV is losing market share to new pay-TV alternatives. With that said, what does the future look like for Charter Spectrum?
Charter is the second largest cable television company after acquiring Time Warner Cable. I am a customer of Comcast (CMCSA) in my Atlanta home and of Charter in another property that used to be Time Warner Cable. So, I can shed some light on what Charter faces as it tries to grow from both the perspective of an industry analyst, and a customer.
The Choice Faced by Every Cable TV Competitor
First of all, Time Warner Cable, along with every other cable television provider offered good TV. Not great, not terrible, but in TV standards, OK. Things improved in recent years because of the threat of competition from others like IPTV from the local phone company. Now Charter acquired TWC. Internet is still not that fast compared to the local phone company or to Comcast, who offer gigabit speed Internet. But the Spectrum television commercials make it sound like things are great. Customers know the scoop.
Second is innovation. There was very little innovation with TWC and now with Charter Spectrum. Innovation is key to growth. There is growth due to acquisition, but not due to innovation. The only cable television company that seems to be growing thanks to innovation seems to be Comcast Xfinity. Comcast is holding its own. Charter and the rest of the cable television industry is not.
Third is increased innovation from competitors, who are gaining strength in the marketplace. In order to stay strong, Charter needs to lead the way in innovation the same way Comcast is doing. Plus, there are many other problem areas and this is the challenge faced by every cable television company.
Traditional Cable TV Industry is Toast
The traditional cable television industry is toast. Cable TV is yesterday. IPTV is tomorrow. Wireless TV is tomorrow. Cable TV had grown over decades, but in recent years that growth wave had crested, and now is falling. And it will continue to fall as other IPTV and wireless alternatives continue to innovate and grow.
There is still growth in pay-TV, however, not in cable TV. New technology like IPTV will continue to win and grow as traditional cable television continues to shrink. That means every competitor needs to look ahead and change in order to grow.
The problem is the cable TV industry had never faced competition and generally speaking, simply does not know how to compete. It’s that simple. In that world, I am afraid many smaller cable TV companies will not change. They will continue doing business as is. That means as competitor continue to innovate and offer new services, traditional cable TV operators will lose market share.
Growth Wave in Pay-TV
Think of this like the growth wave I always talk about. Companies are either on the growth side of the wave, or they have crested and are on the falling side of the growth wave. It’s just that simple. That’s what Charter and every other cable television company needs to focus on. They need to stay on the growth side of the wave.
Cable TV is losing market share. There is no denying that fact. Comcast seems to be doing a good job transforming themselves and battling competitors. Charter on the other hand is not. Not yet. And they are losing market share along with other cable TV companies.
Going forward, this is the litmus test. This is the choice the cable television industry needs to make. Either do the right thing and grow, or lose market share. It seems to be a simple choice, but for many traditional cable television industries, competition is simply not in their makeup. That’s the problem.
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan
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