Merge by WindstreamWindstream has been somewhat on the sidelines with video, relative to their telco peers. Looks like that’s changing somewhat, with news today that Windstream will launch Merge, a new bundled video streaming offer.

Rather than a standalone video streaming product, Merge is a bundled offer that highlights the “merging” of broadband and video, for an “entertainment superhighway” (their words, not mine) experience. Merge appears to be a new way to package existing products. In basic terms, Windstream has combined a Roku streaming set-top-box with their broadband service, and unlimited voice calling, creating a new brand/product around it. Voila, Merge.

“With the explosive growth of streaming content, the ‘information superhighway’ has become outdated,” said David Redmond, Windstream’s vice president of consumer marketing in a Windstream press release. “We created Merge to give our customers access to something better: what we call the ‘entertainment superhighway.’ From movies to first-run and classic television shows, gaming to social networking and more, our customers will use Merge to experience their favorite content on the biggest screens in their homes…their TVs.”

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The new offer includes a six month subscription to Hulu Plus and access to typical Roku channels, like Netflix, Amazon Instant Video, and others. This appears to be the first high profile service provider distribution partnership for Roku. The Merge offer includes the Roku 2 HD streaming box, which normally retails for $49. Windstream is emphasizing the Wi-Fi connectivity of the Roku 2 box for Internet access. It also offers 720P HD viewing.

Merge does not offer, at least not yet, any managed attempt at TV Everywhere, where content is made available on multiple devices. The focus for now is the TV. Windstream is currently offering Merge in their incumbent territory only.

http://www.youtube.com/watch?v=bllmB7dGnnU

Merge is offered in three pricing options, $62.99, $64.99, and $67.99 per month. The differences are largely based on Internet speeds, although Windstream does not specify the exact speeds that are offered for each package. Windstream currently offers DSL broadband tiers of 3 Mbps,  6 Mbps, and 12 Mbps. The current promotional package includes the Roku Box, a wireless modem, six free months of Hulu Plus, and the first month of service for free, with a normal $75 activation fee waived.

Merge is really a lesson in marketing. Leverage the growing demand for OTT video by packaging it with broadband and unlimited voice for a new approach at the triple play bundle. Windstream has avoided the intensive investment necessary for their own video service, relying instead on DBS bundled video. Merge expands their triple play approach.

It will also be interesting to see if Roku expands their service provider distribution strategy. I’m sure many other service providers, particularly smaller carriers who have not invested in their own video offer, would be quite interested, even though the margins for the box itself will be razor thin, if existent at all. But this strategy is about selling broadband bundles, not making money on inexpensive OTT streaming STBs.

 

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9 thoughts on “Windstream Launches Merge, A New OTT Triple Play Approach

  1. As the author points out, you can probably buy these at retail for about the same price you'll get through Roku. Don't think there will be much/any room for mark-up, unless your going to commit to 100K+ units or so.

  2. We have been doing this since 2007. There is no margin in the box or revenue share of the content because as stated in the article, margins are thin. However, a bundle like this attracts a lot of customers that never churn. Why not ad an off-air antenna while you're at it and position the bundle as a way to get rid of high cable bill's and still watch all the local channels?
    Note: To be successful do not expect customers to self-install via wireless, hard wire the box with CAT-5. Wireless goes on the fritz too often, think microwave popcorn. Pop some corn, zap your movie…

  3. Classic Windstream – backward looking and over-priced. I wonder how many of their C-level executives get their shins skinned always trying to catch up to the bandwagon before it passes them by.

    1. Hmmm. Not sure I would characterize this as backward looking. They are actually doing something different here – how many service providers have formally rolled OTT into a bundle? Now granted, there is an argument to be made that this is simply dressing up a DSL and voice bundle with a Roku box. But I give them credit for trying something new. Perhaps there is a model for doing just this – tie OTT to broadband, in the hopes that customers subscribe to a higher ARPU broadband bundle. You're only risking a $49 box. The downside risk seems pretty minimal.

  4. I wonder if it truly would be a deal for me and the family, being that Windstream is the ONLY service provider in my area to offer ANY type of internet service at all? Sounds like I will have to buy into it if I want internet…

  5. Can someone explain why you would use merge vs just streaming your content through a gaming device? i am not understanding why the Roku would be better. i have noticed that since windstream started the whole merge venture that my internet speed and my streaming on these devices has been awful. Is it simply a play to make you take this new service?

  6. Read this article because I couldn't figure out what "Merge" was. It sounds like an Internet and phone with a Roku box thrown in. What's the big deal? You can buy the Roku box directly or at this point stream from a variety of different devices. Roku boxes are not hard to set up at all, though I agree with whoever said that you might be better off hardwiring it. Of course, if the underlying internet service isn't robust enough to reliably stream the content it doesn't matter how it's marketed or bundled. I'd advise Windstream to focus on improving their network and waste less time and resources on marketing.

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