Time Warner Embraces Streaming Future

by Anthony John Agnello | April 22, 2011 2:10 pm

In the wake of shedding more than 400,000 cable subcribers last year, Time Warner (NYSE:TWX[1]) has pointed to a bad economy, but the truth is that customers may have been spending their money elsewhere.

Mobile subscriptions skyrocketed over the past 18 months, with AT&T (NYSE:T[2]) and Verizon (NYSE:VZ[3]) adding 400,000 and 800,000 subscribers, respectively, just in last year’s fourth quarter. According to a January study from Bytemobile[4], 60% of all traffic on mobile devices this year will be from video.

The cable audience isn’t disappearing, it’s just moving.

It’s promising then that Time Warner at least is preparing for the move to an all-video-streaming future. The company has embraced streaming-video businesses like Netflix (NASDAQ:NFLX[5]) as a way to keep its Warner Brothers movie business relevant in the home as DVD purchases slow, but it’s also aggressively developing its own presence as a streaming-video provider.

The company’s HBO premium cable channel has just released its own video-streaming channel, HBO Go. Subscribers can now watch HBO programming on the web without also needing a cable-TV subscription. Time Warner said earlier this week that it will release an HBO Go app for Apple’s (NASDAQ:AAPL[6]) iPhone and iPad as well as Google’s (NASDAQ:GOOG[7]) Android mobile operating system in the next month.

The company’s Time Warner Cable unit released an iPad app last month that lets existing cable subscribers watch a selection of 32 channels on the tablet at no extra charge. As a test bed for a whole new subscription model, the app has been something of a failure, but not because of disinterested viewers. Viacom (NYSE:VIA[8]), News Corp. (NYSE:NWS[9]) and Discovery Communications (NASDAQ: DISCA[10]) lashed out at Time Warner, demanding their channels be removed from the app since no app-specific contracts had been drawn up. Time Warner has since promised to replace those lost channels with substitutes until they can be re-added to the service.

Time Warner isn’t alone in embracing the iPad as a new outlet for its cable business. Comcast (NYSE:CMCSA[11]) and DirecTV (NASDAQ: DTV[12]) also offer streaming options on the platform. Time Warner’s multi-limbed approach at expanding its cable service shows an eagerness to adapt to the new landscape that should be heartening to investors.

Depending on the success of HBO Go and Time Warner’s ability to come to an agreement with disgruntled partners like Viacom, it wouldn’t be surprising to see the company offer a streaming-only subscription to all of its television-based programming. That will be the next great experiment as cable TV continues to decline.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[13] and become a fan of InvestorPlace on Facebook.[14]

  1. TWX: http://studio-5.financialcontent.com/investplace/quote?Symbol=TWX
  2. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  3. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  4. January study from Bytemobile: http://blog.hubspot.com/blog/tabid/6307/bid/8629/In-2011-60-Percent-of-Mobile-Web-Traffic-Will-Be-Video-New-Data.aspx
  5. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  8. VIA: http://studio-5.financialcontent.com/investplace/quote?Symbol=VIA
  9. NWS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NWS
  10. DISCA: http://studio-5.financialcontent.com/investplace/quote?Symbol=DISCA
  11. CMCSA: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMCSA
  12. DTV: http://studio-5.financialcontent.com/investplace/quote?Symbol=DTV
  13. @ajohnagnello: http://twitter.com/#%21/ajohnagnello
  14. InvestorPlace on Facebook.: http://www.facebook.com/pages/InvestorPlace/178906405484848

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