Can Time Warner Cable stop video subscriber erosion?

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Steve Donohue, FierceCableIt's rare for a cable executive these days to admit that losing video subscribers is a concern. Since DirecTV (Nasdaq: DTV), Verizon (NYSE: VZ), AT&T (NYSE: T) and other rivals began eroding basic cable subscribers, Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), Cablevision (NYSE: CVC) and other cable MSOs have encouraged Wall Street analysts to focus more on their total number of revenue generating units (RGUs), which reflect growth in cable's high-speed data and telephone business.

Time Warner Cable reported this morning that it lost 129,000 video subscribers during the fourth quarter. COO Rob Marcus gets some credit for highlighting the subscriber losses during the call and outlining a plan for stemming the losses. "We still lost 129,000 video subscribers, and that's not acceptable. So we've got much more work to do," Marcus said.

The MSO has relied heavily on marketing to drive its subscriber acquisition and retention efforts. You'll see a new Time Warner Cable commercial on Sunday during CBS's coverage of the Super Bowl if you live in a city where it owns a cable system.

Like all pay TV providers, Time Warner Cable also uses aggressive discounts on programming and triple-play packages to lure subscribers. But Marcus told analysts Thursday that the company has been hurt by the number of subscribers who defect after the promotional pricing periods expire. He said the company will attempt to improve retention by changing its approach to how its packages are priced after promotional pricing expires, but he offered no other details on the strategy.

While an increased marketing budget and retention programs could help Time Warner Cable reduce subscriber losses, the key to attracting customers is deploying advanced products. DirecTV (Nasdaq: DTV) and Dish Network (Nasdaq: DISH) have been pummeling cable operators in ad campaigns for their respective Genie and Hopper DVRs, which can record up to six programs simultaneously and contain three times the storage capacity of most cable DVRs.

Marcus said Thursday that Time Warner Cable would deploy a "souped up DVR" containing six tuners during the second half of the year. It will be interesting to gauge how the new DVR, coupled with products such as the TWC TV app and a cloud-based program guide, will impact Time Warner Cable's subscriber retention efforts.--Steve