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TWC TV, the regional cable television network of Time Warner Cable Inc. (TWC - Analyst Report) is now available on Roku player and Roku streaming devices in the U.S. This is the first time that Time Warner Cable has allowed its TV application for streaming to go on a consumer device connected to a television. Earlier in Jan 2013, Time Warner Cable and Roku Inc. announced their collaboration to bring TWC TV to the Roku platform.
Time Warner Cable’s video, who already owns Roku boxes, will now enjoy 300 television channels including the very popular Animal Planet, Food Network and HGTV. Customers also get the option of checking out recently viewed channels and can also create their own favorite channel list. However, channel availability will depend upon the typical market and subscription package selected by the customer.
Additionally, the deal will allow Time Warner Cable’s customers to access live TV and Internet-based video from streaming sites such as Netflix Inc. (NFLX - Analyst Report) and Google Inc.’s (GOOG - Analyst Report) YouTube using the same set top box.
Online video streaming service providers like Netflix Inc. Hulu.com, YouTube, Amazon.com Inc. (AMZN - Analyst Report) etc. have become sources of potential threat to the traditional cable TV operators as they offer an extremely cheaper source of TV programming.
We view this agreement as a win-win for both the companies. This is going to be a milestone deal for Roku as it is expected to increase the sales of its set top Roku player. Simultaneously it will allow Time Warner to popularize its TV application and capitalize on the popularity gains of streaming services.
However, it had been noted earlier that about 30% Roku users do not use any other Pay-TV service. We believe availability of this latest streaming service could significantly impact Time Warner Cable’s falling residential video business, which has lost 129,000 video customers in the recently concluded quarter.
Moreover, the demand for streaming service through over-the-top (‘OTT’) set top box market has been growing for quite some time and has been mostly dominated by Apple TV and Roku. The space is expected to get more competitive as Google TV and Intel Corporation are expected to enter the OTT set top box market.
Currently, Time Warner Cable carries a Zacks Rank #5 (Strong Sell).
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