Cox Tweaks flareWatch

Trial May Be Blueprint For OTT Counterattack
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Cox Communications’ limited trial of a broadband- TV service tailored for so-called cord-cutters is just getting underway, but the MSO is already making some major changes to the offering’s pricing and its scope of content.

Chief among recent changes to flareWatch, the service Cox is testing with cable-modem customers in Orange County, Calif., is its monthly service fee. The MSO recently jacked up flareWatch’s price from an initial $34.99 to $39.99. FlareWatch offers almost 100 live TV channels (but none from the premium group of HBO, Showtime, Starz and Epix) and 30 hours of cloud DVR storage.

In tandem, Cox has also slashed the fees for the Fanhattan Internet protocol-only Fan TV set-tops that power flareWatch from $99.99 per unit to $49.99. The limit of three devices per customer remains.

To justify the pricier fee, Cox has made some service changes — access to a library of video-on-demand content and a streaming-music offering called flareListen, a rebranded version of the Rhapsody service.

Cox is also preparing to introduce flarePlay, a gaming service that will offer new titles every month.

Cox has not said how many customers take flareWatch, limited to broadband-only customers who take at least the MSO’s Preferred tier, which delivers downstream speeds of 10 Megabits per second for about $47 per month.

“It is still early and the trial is small, but the flareWatch customer feedback at purchase and product satisfaction have been positive,” spokesman Todd Smith said.

Cox also has not said much about its strategy for flareWatch, which comes as MSOs grapple with continued video subscriber losses while facing the specter of Intel Media and a crop of other “virtual” MSOs expected to spring forth later this year and into 2014.

Once those services take hold, it’s possible that MSOs will try to obtain programming rights that will enable them to offer subscription video services beyond their traditional franchise areas, riding someone else’s access network to deliver them. No U.S. cable operator has announced such explosive plans, however.

Research firm IHS sees flareWatch as a blueprint for how the pay TV industry could mitigate the threat of online video providers and upsell non-cable video subs — cord-cutters and cord-nevers alike — to a form of TV service. Cox’s new monthly price still undercuts the average cable rate of $63.99, according to IHS, which predicts that U.S. pay TV penetration will fall from 86% in 2009 to 81% in 2017.

“Cox’s flareWatch is likely to be the first of a new generation of products from other cable operators that will take a ‘if-you-can’t beat ’em-join-’em’ approach to tackling the OTT challenge, i.e., providing video service over the Internet,” Erik Brannon, analyst for television research at IHS, said in a statement. “These types of services may be successful for the cable operators, but the accomplishment may come at the cost of significant reductions in margins.”

TAKEAWAY

Cox has already made some major tweaks to its still-in-trial flareWatch broadband-TV service.

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