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WOW Says It’s ‘Shape-shifting’ Away from ‘Sub-20%’ Margin Video Customers

WOW! tv+
(Image credit: WideOpenWest)

Mid-sized cable operator WideOpenWest (aka WOW!) said its high-speed data revenue was up 13% year over year in the fourth quarter to $151 million, and up nearly 9% for all of 2020 to a record high $567 million.

As for the linear video business? The Englewood, Colo.-based MSO isn’t just marginalizing it anymore. It’s seems to be flat-out trying to run away from it.

The company’s video subscriber base shrunk nearly 18% in 2020 to 308,200 customers. Video revenue was down nearly 5% for the year to $408.8 million. Asked by an investment analyst during Thursday’s earnings call where WOW’s video business would be in three years, company CFO John Rego said it would be below 100,000 customers at the current trajectory.

Also Read: Fringe Benefits

But that's totally OK. 

“So we're kind of shape-shifting the P&L, getting rid of slowly but surely video, which is a sub-20% gross margin product, and replacing it with high-90 percentile gross margin product HSD, which drives less cost below the gross profit line,” Rego said.

Helping those high-speed internet margins is the fact that, according to WOW, 80% of new internet-only customers are choosing the self-install option, up from only 30% a year prior.

WOW markets third-party virtual MVPDs including YouTube, fuboTV and Philo to its customers as replacements to linear pay TV. It also has its own Android TV-based IP video solution, WOW! tv+, that’s currently available in 95% of its footprint. 

For her part, WOW CEO Teresa Elder described the customer transition away from linear video in collaborative terms.

“What we're seeing, as you can tell from our subscriber numbers, we are growing our subscriber base even as our video subscriptions are coming down,” Elder said. “So as we talk to customers and they're telling us about their desire to continue consuming video in a big way, but that they want to manage their budget, we are very consultative and actually agnostic on how they get their video, whether it goes to streaming services or if they choose to switch towards the WOW! tv+  product. And what we're finding is customers appreciate that empathy, that understanding and are working with them to get the streaming services they want.”

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!