Upside from TWC’s App, But It’ll Be a Bumpy Ride
Time Warner Cable (NYSE:TWC) recently launched an iPad app for its customers to enable live streaming of 32 channels, becoming the first major cable provider to do so. However it has faced some issues since then. Below we gauge how these issues could impact Time Warner Cable’s stock value. The company competes with satellite pay-TV providers like Dish Network (NASDAQ:DISH) and DirecTV (NASDAQ:DTV), cable companies like Comcast (NASDAQ:CMCSA), and telecom operators like AT&T (NYSE:T) and Verizon (NYSE:VZ).
Our price estimate for Time Warner Cable stands at $68.14, roughly 5% below the stock’s market price.
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A Brief Look at TWC’s App Launch
The new app allows Time Warner Cable’s subscribers to access 32 cable networks live on their iPad. However, this also requires that customers subscribe to both pay-TV and broadband service from Time Warner Cable. [1] What this means is that users can only connect to the app in their homes. Despite this restriction, the app has still generated high demand as it is both simple to use and free. With close to 80,000 downloads in a single day, the app was one of the most downloaded free apps from Apple’s (NASDAQ:AAPL) store. [1]
A Potential Issue
Not too long after the launch, Time Warner Cable had to remove 11 channels (almost 33% of channels available) from its iPad app due to concerns raised by content owners that want additional compensation for streaming channels live on the iPad.
Time Warner Cable sees the app as no different than making channels available on TV, but some content owners do not share this view. While content owners justifiably want to extract all possible revenue from their content (especially given declining DVD sales) an added fee ultimately weakens the attractiveness of Time Warner Cable’s app. It will be interesting to see how this battle plays out, as its outcome will likely affect customer adoption of the feature.
Potential Impact
Ultimately the aim is to offer users the best possible experience in order to maintain their business. Increased competition in the pay-TV market means that service providers will need to experiment with new and exciting features. While Time Warner Cable’s market share has declined in the recent past, increased adoption of the new streaming feature could provide a spark towards recovery.
It is important to note, however, that Time Warner Cable’s new app is not entirely without competition. Dish Network offers a service that allows customers to watch live or recorded programming via slingbox technology. [2]
You can drag the trend line in the interactive chart above to see how an improvement in Time Warner Cable’s market share could affect the company’s stock value.
See our complete analysis of Time Warner Cable here
- Time Warner Cable’s iPad App Scores, Draws Fire, The Wall Street Journal, Mar 16 2011 [↩] [↩]
- Dish Network to provide free TV streaming on mobile devices for subscribers, ipadforums.net, July 2010 [↩]