Charter Communications last Thursday launched the Spectrum App Store, which allows customers to more easily activate, manage and upgrade SVODs included in pay TV packages and lets non-video customers purchase streaming subscriptions a la carte – with broader visions for the app store down the line.
On the same day, Charter held an event in NYC with a conversation between executives including CEO Chris Winfrey, ESPN Chairman Jimmy Pitaro and AMC Networks CEO Kristin Dolan to discuss the Spectrum App Store, Charter’s video strategy and collaboration between distributors and programmers under its reimagined video model.
First a little background to set the stage (or for those familiar, scroll down to the next section to jump straight to what the Spectrum App Store offers).
Since the resolution of a carriage dispute with Disney in 2023, Charter, the largest MVPD in the U.S. with 12 million video customers, has been driving forward a new vision for video against a larger declining pay TV market and DTC backdrop. Over the past couple of years it successfully struck deals with major programmers to include ad-supported versions of their direct-to-consumer streaming apps in Charter Select pay TV packages at no extra cost to consumers.
It now has a suite of more than 10 streaming apps that Charter says collectively equate to a $125 monthly retail value, bundled for no added cost alongside 100 live linear channels. There have been early positive signs that the approach has helped stem pay TV customer bleeding, with Charter narrowing video customers losses to 80,000 in Q2 - but where the company’s overarching goal with video is to sell more of its higher-margin broadband product.
In addition to bringing more value to video customers by including major streamers alongside linear television and not making them pay twice for content, the model is also meant to benefit programmers – with Charter often agreeing to use its 25,000-person sales force and other marketing resources to sell DTC apps a la carte to its much larger residential broadband base, of which it had nearly 28 million as of Q2.
And while programmers from AMC and Disney to Paramount and Warner Bros. Discovery and more have signed on, the model doesn’t do much good if consumers aren’t aware of or can’t easily activate, upgrade or purchase said DTC apps offered by Charter – hence the launch of the Spectrum App Store.
The Spectrum App Store
The ability to easily activate subscriptions, upgrade to ad-free versions or purchase a la carte had been a point of friction in Charter’s video offer and it previously made tweaks to offers, introduced self-serve digital tools, and had said a digital SVOD storefront was in the works.
Now that’s come to fruition with the Spectrum App Store, which is available via the Spectrum TV app and Spectrum’s website.
Through the App Store, Spectrum TV customers on eligible video plans can activate the ad-supported apps included and upgrade to commercial-free versions (by paying the retail price difference) and Spectrum’s non-video customers can purchase and add DTC apps to their Spectrum account.
Apps available at launch include ad tier versions of Disney+, Hulu Bundle, ESPN Unlimited, HBO Max, Paramount+, Peacock, AMC+, ViX, Tennis Channel and Fox One, with discovery+ and BET+ coming soon.
During the NYC event, Charter President of Product and Technology Rich DiGeronimo described how within the App Store Charter video customers can see apps they get access to, click on one to get started, enter their email address, and then through an API integration on Charter’s end, be authorized to stream.
In terms of being able to reach consumers with the App Store and provide an easy experience, DiGeronimo cited great distribution, including launches on LG and Vizio smart TV platforms this year and the scale of its streaming customer base. The product executive emphasized that Charter isn’t only the largest MVPD in the U.S., but “the largest live TV streamer” in the country via its Spectrum TV app.
“This past quarter, the Spectrum TV app streamed [on] about over 15 million unique devices. It’s also really well perceived by our customers,” he said, citing a 4.7-star rating with over half of a million reviews.
All a la carte streaming subscriptions purchased by non-video customers through the App Store are “sold on transactional biller,” a Charter spokesperson affirmed to StreamTV Insider, meaning billed separately from a customer’s monthly internet and mobile statement from Charter, for example.
Consumers still need to separately download or access the third-party streaming services in their respective apps or website.
Broader vision for the Spectrum App Store
Charter has broader visions for its App Store, including selling additional third-party streaming services and other bundles or packages.
Charter confirmed to StreamTV Insider that it plans add additional SVODs and streaming services to its app store in the future – including those that aren’t offered as part of carriage deals or included in pay TV packages, although the operator declined to share any more information regarding the scope or timing for that.
Similarly at the Thursday event, DiGeronimo emphasized “this is just the start,” with the Spectrum App Store initially focused on Charter’s so-called Seamless Entertainment push.
“This store gives us the capability to sell new bundles, even apps that we don’t particularly sell in the past, like Netflix, but also to even sell other products and packages through this store,” he said.
Programmer perspective from ESPN, AMC
The goal is to deliver a video model that’s mutually beneficial for Charter itself, programming partners, and ultimately consumers. On Thursday Charter brought leaders from partners, including AMC’s Dolan and ESPN’s Pitaro on stage with Winfrey for a discussion moderated by CNBC’s Alex Sherman to share their perspectives on collaborating and to give a little insight into initial thoughts around Charter’s approach.
Charter had nothing to lose with video
Charter’s revamped vision for video – and related move last year to add video back into its primary marketing bundle alongside broadband and mobile - came as the broader pay TV ecosystem continued to decline with consumers cutting the cord and programmers launching their own lower-cost direct-to-consumer services.
With little-to-no margins and fleeing subscriber bases, many operators in the space deemphasized or abandoned video products to instead, if they could, focus on higher-value connectivity service like broadband.
Charter was less quick than others to turn away from video, but Winfrey on Thursday again said that it wasn’t so much about being in love with the video business as it is having a belief that the video product “actually is a unique way for us to sell our broadband and mobile products.”
But in 2023, increasing rates, declining subscribers and essentially non-existent video margins meant the product was at the point of becoming a liability to Charter’s broadband customer relationships, Winfrey said last week, as they had to take bill hikes that often related to video programming rate increases.
Those factors meant that as Charter went into Disney carriage negotiations it was in a position to say, “I got nothing to lose” with video, per Winfrey. In turn, that left room for the operator to “really think outside of the box” and take a different approach to the product from a consumer-focused perspective and try to restore some value to video – hopefully for all participants.
And while there’s no denying the robust streaming offer in Charter’s Spectrum Select TV plan, monthly pricing starts above $100. In that regard, Winfrey noted the TV packages aren’t cheap and “may not be for everybody” but for consumers that do pay, he thinks they get “every bit of the value” from the DTC apps now included alongside a full live linear pay TV channel lineup.
Not something ESPN was thinking about
As for getting programming partners on board, ESPN’s Pitaro on Thursday acknowledged that the Disney-owned brand walked into negotiations with Charter two years ago thinking it was a traditional renewal on the distributor side. Including DTC apps in a pay TV packages was “not something that we had been contemplating,” he said.
But Pitaro gave a “ton of credit” to Winfrey and team, who he said came to the table with “a very clear plan” – albeit it new compared to what had been done before.
As history shows, Disney wasn’t immediately on board as there was a brief channel blackout while negotiations hit an impasse and sides contemplated – but a deal was struck about a week later.
From Piatro’s view, given what’s a fragmented and frustrating TV ecosystem for viewers, particularly around sports, the point that really resonated with the programmer was Charter’s focus on “taking friction out of this process” – which he said, “is nothing but goodness for Disney and for ESPN.”
He went on to say that while rare, the ultimate outcome was a “win, win, win” for both partners and consumers.
AMC’s take on Charter’s video model? Hell yeah.
Disney was the first of a slew of programmer deals for Charter, but some were more eager to jump in. Asked by CNBC’s Sherman at the Thursday event about initial response to Charter’s video model, AMC’s Dolan said: “We were thinking hell yeah”.
As a smaller player in the entertainment-focused space, Dolan noted her goal is get the AMC product everywhere and content out as quickly and efficiently as it can.
With its smaller size and focus on linear entertainment networks, AMC doesn’t wield the power or resources to sell DTC apps on its own the way Disney can. Per Dolan, on a great day, AMC+ is probably consumers’ fifth or sixth choice for streaming services And as analysts at MoffettNathason pointed out in the early days of Charter’s new model, AMC has been walking a bundled path with linear partners and its AMC+ app since early on.
AMC also sees subscriber and economic benefits from what Charter’s model provides.
Dolan said the arrangement has driven over 850,000 activations on Charter for AMC+. Charter also subsidizes the price increase for upsells into the ad-free version of the SVOD – with the $3 incremental retail payment rebated by Charter.
“If we had to grow that way ourselves as direct-to-consumer product, we would never have the success that we’ve had with Charter,” Dolan said.
During the event, execs were asked whether for programmers, having their own fully DTC subscriber is more desirable than what comes down to a wholesale subscriber (and related rate) through the Charter partnership.
For Dolan, she said it’s not about the $6.99 retail price tag for AMC+ compared to a wholesale rate it gets from Charter, but “really what the fully loaded cost to serve a subscriber is.”
Thinking that way, she noted you’d have to bake in customer service expenses, marketing and subscriber acquisition costs, as well as retention – adding that Charter “pick[s] up a lot of that” through its existing business operations and offers added value from advertising.
Dolan acknowledged that the DTC math doesn’t quite equal what programmers got per subscriber in the heyday of traditional pay TV “but it gets you a little bit closer.”
The CEO also called out the ability to allow authentication and make it easy for consumers to activate the AMC+ DTC app provided by Charter as key – something the operator also has plans for on CTV platforms.
On-platform CTV app activation, authentication
On the activation and authentication front of SVODs included or sold to its customers, the new Spectrum App Store is one avenue, but Charter’s DiGeronimo said they know consumers don’t always go to the company’s app or website.
So it’s working with partners to enable on-platform CTV notifications of available but not-yet-activated streaming apps and authenticated logins using household credentials (similar to earlier TVEverywhere app processes). DiGeronimo showed an example of the Hulu app and the Xumo Stream Box – which will have the capability in 2026.
A Hulu app tile, for example, on the CTV home screen would have a little notification icon to alert a Spectrum customer they hadn’t yet activated their included streaming subscription. Using household information to authenticate that the user has access to Hulu via Charter, the consumer could then skip a QR code or other additional steps and automatically activate and login to Hulu and start watching.
“We’re working with programming partners to do that here,” DiGeronimo said of enabling activation via the Xumo platform, noting “our goal is to launch this with all connected TV operating systems.”
Leaning on partners to combat lack of consumer awareness and trust
That’s one method to let consumers know about streaming services included in Charter’s pay TV package. But on Thursday Winfrey suggested consumer understanding and awareness at large of what’s available from the operator is lacking, and education is part of the work it must do – with a little help from some friends.
Winfrey didn’t shy away from the fact that before the decline of pay TV, cable operators in general didn’t always take a very customer-friendly stance, such as providing channels for free initially only to later up bills and bloat packages with channels. While fruitful for operators for a time, consumer trust in cable companies eroded.
“Our number one issue is…customers don’t trust the cable company,” Winfrey said Thursday.
It’s an issue for Charter, which for the first time in a while, said it has a video product it feels proud to put on the bill – but it still needs to raise consumer awareness and communicate what’s available to the market.
“We haven’t regained the credibility to go do that, and so we need the programming partner’s help on that front,” he said.
To do so it’s leaning on content partners’ IP and talent to promote DTC apps, packages and content available from Charter, including a commercial spot over the summer with AMC and work with ESPN to communicate availability of ESPN Unlimited in Charter packages.
But with major programmers on board, around a dozen DTC apps included or available to purchase, and now a digital Spectrum App Store, Charter’s taking another step forward on its revamped and repositioned video product. Time will tell if Charter’s vision for video is one consumers subscribe to.
Charter, which is also seeking to acquire operator Cox in a $34.5 billion deal, reports Q3 earnings on October 31.