WOW! (formerly Wide Open West) logged declines in its fourth quarter (Q4) and year-end 2023 revenue due to challenges in its broadband business and a decision to move some video customers over to a third party online service.
This week, executives at WOW! revealed the telecom took in $168.8 million during Q4, down 6 percent compared to Q4 2022, with full year revenue clocking in at $686.7 million for 2023, or 3 percent lower than the prior year.
Much of WOW!’s revenue came from the sale of high-speed data services — another way of saying “broadband Internet” — with that business segment generating $108.7 million during Q4, or 1.5 percent higher on a year-over basis. It was also the biggest earner for WOW! throughout 2023, generating $430.4 million, or around 4.7 percent more when compared to the prior year.
Losses in WOW!’s cable TV, telephone and business-to-business segment weighed on quarterly and year-over revenue, according to the company’s financial report. In television, WOW! earned $35 million during Q4, down from $43.6 million the previous year.
Last May, executives at WOW! affirmed they were ending the distribution of their traditional cable TV product and pushing customers toward Google-owned YouTube TV, which costs $73 per month and includes broadcast channels and cable networks.
The decision is part of a broader strategy to convert WOW! into a pure broadband player, a provider of high-speed Internet and telephone service. But there is still more work to be done, and not all customers were moved over to streaming by the end of 2023. WOW! ended the year with 90,800 TV customers.
But the strategy might have backfired on WOW! — with customers no longer able to sign up for video service in some areas, those who want to bundle TV with high-speed Internet and other services are moving away from WOW! in favor of other competitors.
During a conference call with investors on Wednesday, WOW! CEO Teresa Elder confirmed the company’s biggest competitor in the broadband space was not fixed wireless services like Verizon Home Internet and T-Mobile 5G Home Internet, but larger cable companies that continue to offer broadband and video bundles.
“The majority of customers who churn in and out of WOW! will go to Comcast or Charter, who are our biggest competitors every day — kind of all day,” Elder admitted on the call.
Along with the company’s decision to push customers from WOW! television toward YouTube TV, Elder said the company’s decision to raise prices across some of its broadband Internet plans encouraged subscribers to shop around.
Even before the holidays, Comcast’s Xfinity and Charter’s Spectrum were offering deep discounts on broadband Internet plans that offer high-speed downloads for a flat monthly price that is locked in for at least 12 months. Some plans — specifically those offered by Comcast — include equipment and unlimited high-speed data, and customers of both companies can save even more money when they agree to bundle other services like wireless phone and cable TV.
WOW! competed with these promos by agreeing to increase speeds across its broadband tiers: Customers on WOW!’s 300 megabits per second (Mbps) and 500 Mbps plans saw “a surprise boost in their broadband speeds at no additional cost,” Elder said. (Comcast and Charter have taken a similar approach with their lower-priced service plans over the past six months.)
Elder said WOW! is also trying to differentiate itself by offering “a simplified pricing option, which includes a price lock, free modem, no data caps, or contracts,” and extended “short-term extensions” of certain promotional plans to customers who were moving off contracts “to help create a soft landing for customers,” both of which have been “extremely well-received” by the company’s remaining subscribers.
“The early success of these steps has given us additional confidence in the progress we are making to strengthen our subscriber numbers in our legacy footprint,” Elder said.
Elder also tried to assuage concerns about the company losing broadband customers during 2023, saying those who stuck with WOW! generated a higher average revenue per user, or ARPU, a key metric that investors look to.
Broadband ARPU came in at $72.90 by the end of 2023, an all-time high for WOW!, Elder said.
“We expect HSD ARPU will increase further in 2024, although the rate of growth will likely ease as the impact of the steps we’re taking to address subscriber churn work their way to our financials,” Elder affirmed.
