The Cable Company That Wants to Take the Pain Out of Streaming

Guess who says he can help? The cable guy.

For the past few months, Charter Communications’ Spectrum, one of the nation’s biggest cable providers, has been shipping new customers a device, Xumo, that lets them stream live TV through an app, alongside streaming mainstays such as Netflix, Disney+ and Max. You can still get a traditional cable box instead, but only if you request it.

Charter’s emphasis on Xumo is part of a strategy to bring streaming and live TV together in one package. The company wants Xumo to become a superstore for streaming apps and take a cut along the way. As part of a recent deal with Disney, Charter can offer Disney+ and ESPN+ to some of its TV subscribers at no cost, and the company will have chances to add more apps to its list in coming months.

Streaming’s rise has fueled millions of people to cut the cable-TV cord, decimating a business that had been the bedrock of the media and entertainment industry for decades. Now, cable companies see a role for themselves in solving some of the streaming world’s biggest problems.

In many ways, cable companies are in a prime position to help as the industry explores ways to package streaming services together. Charter can be an independent middleman, without conflicting interests, since it doesn’t have a subscription streaming-entertainment service of its own.

“There’s an opportunity for cable companies to rebundle streaming services in a way that is friendly to consumers," MoffettNathanson analyst Craig Moffett said.

Packaging programming together is what these companies have long done. “For cable companies, the road to success is to become a re-aggregator," said Alan Wolk, co-founder of media-analytics firm TVREV.

A decade late

The biggest challenge is that Xumo is late to the game. Roku, Amazon, Google and Apple offer streaming devices to help people manage their apps. (Most have been around for over a decade.) They don’t have some of the advantages cable companies have—such as a longstanding billing relationship—but they have collectively eaten up much of the market. According to TechInsights, some 92% of U.S. TV households already have at least one connected-TV device, a category that includes smart TVs and streaming boxes.

Kimberly Bennett, a 58-year-old nurse from Superior, Wis., who’s been using the new Xumo box for a few months, said it has vastly simplified her earlier routine, which involved toggling between three separate pieces of equipment: a Spectrum cable-TV box for live television; her smart TV, on which she navigated 10 different streaming apps; and a Roku stick for three other services that weren’t supported on her TV.

Early users of Xumo say the new device and its Spectrum live-TV app have their share of glitches and limitations, such as the inability to pause live TV, a feature that Charter said will be added later this year.

“I do like it, but it’s a newer technology that could use a couple of updates to make it truly useful," Bennett said.

The Xumo box that Charter is using for its streaming transition was the work of another cable-TV company: Comcast, which has invested billions of dollars over the past decade to advance the technology inside traditional cable boxes—and already had given its broadband customers an earlier iteration of the box called Flex. Comcast licenses the operating system to other cable companies around the world for their own cable-TV and streaming boxes.

Xumo was set up as an independent company, a 50/50 joint venture between the two cable giants.

Charter has been more aggressive about deploying Xumo as the gateway to its offerings, making it the default option for new pay-TV subscribers. Comcast is offering Xumo exclusively to its broadband-only customers, though its pay-TV users can get advanced cable-TV boxes that already have Xumo-like features.

Comcast charges its broadband subscribers a $15 activation fee for Xumo, and they must return the box if they cancel their broadband service. Charter, meanwhile, is giving its subscribers the option to buy the box outright for $60 or pay a $5 monthly service fee to lease it.

‘We’ve unbundled to rebundle’

Both companies stand to benefit as Xumo generates revenue by getting a cut of subscriptions to streaming apps and the ads shown in them. The Xumo software also powers a line of smart TVs that made its debut last fall.

Xumo will provide a foundation for the companies to build on as more consumers cut the cord. Combined, Comcast and Charter have about 29 million pay-TV customers, some 10 million less than five years ago. Xumo also can help the broadband businesses that have long been the growth engines for cable providers but have recently stagnated, amid growing competition from 5G fixed-wireless internet providers.

Offering access to streaming apps is likely to help improve cable companies’ customer retention, Charter and industry observers have said. “The more services you can attach to the same bill, the more likely that customer is going to stay with you," said John Fletcher, a senior research analyst with S&P Global Market Intelligence.

There’s a risk, too: Xumo may make customers so comfortable with streaming that even more end up canceling cable-TV subscriptions.

The streaming landscape is getting cluttered, with Americans subscribing to more than four streamers on average. People who ditched the cable bundle because it was requiring them to buy channels in one package are now open to some sort of packaging in streaming.

Big industry players, from Apple to Paramount to Peacock, are looking to make that happen. Netflix and Max are being bundled together as part of a deal with Verizon, which has emerged as another middleman capable of packaging together streaming offerings.

“It is somewhat ironic that we’ve unbundled to rebundle," Comcast Chief Executive Brian Roberts said on the company’s most-recent earnings call.

Roku and tech companies including Apple, Google and Amazon are all vying to become the de facto platform through which users watch—and, ideally, pay for—everything. Streamers, on the other hand, have an incentive to keep billing users directly so that they keep all the subscription revenue, as well as customer data.

Lost? Use voice search

Charter got an opportunity to angle into the streaming game during a tense negotiation with Disney over carriage of the entertainment giant’s TV channels. The deal that the companies reached in September, after a nearly two-weeklong blackout, allowed Charter to provide the ad-supported versions of Disney+ and ESPN+ to some of its pay-TV subscribers, at no extra cost.

Charter has hinted it may demand similar concessions from other programmers. Charter’s agreement with Paramount, owner of networks such as MTV and Nickelodeon, is set to end this spring, The Wall Street Journal reported.

Xumo, like most major streaming devices and smart TVs, offers a voice-activated search feature meant to help people find the program they want. Simply saying “Play Severance," for instance, is enough for Apple TV+ to open and the show to launch.

“I can never remember which streaming platform has which show," said Bennett, the Wisconsin nurse who’s been relying heavily on voice search since she got her Xumo box months ago. “Now I don’t have to worry about that."

Xumo is still a long way from being an all-in-one streaming TV bundle, partly because of programmers’ reluctance to let their content live on somebody else’s platform—a problem that has been bedeviling other device makers.

“Xumo is still, frustratingly, a bit more like an app store than a new video bundle," MoffettNathanson analysts wrote in a research note. “But that’s not for lack of trying, and it is unquestionably a step forward."

Write to Patience Haggin at patience.haggin@wsj.com and David Marcelis at david.marcelis@wsj.com