AT&T Wants to Ditch the Dish
Oh the irony. A mere two years after AT&T closed on its acquisition of DirecTV, the telco is now racing to replace the satellite distribution system with a new over-the-top video delivery platform.
This initiative isn't the same as the DirecTV Now service, or at least not exactly. Where DirecTV Now is aimed at mobile subscribers, the latest OTT service is being designed for in-home viewing with a combination of new thin-client hardware and whatever home broadband connection a consumer wants to use.
AT&T Inc. (NYSE: T) CEO Randall Stephenson announced the company's latest OTT plans at this week's annual Goldman Sachs Communacopia conference. He emphasized the benefits of delivering TV as a software-based service, noting that the cost of customer acquisition should drop dramatically (no satellite dish to install), and that with the right platform in place, AT&T should be able to provision a wide variety of video offerings for different audiences. These could include basic content packages, but also premium bundles with features like DirecTV's NFL Sunday Ticket service and access to 4K Ultra HD networks.
Stephenson also talked about the rapid timing for AT&T's newest OTT platform.
From the Seeking Alpha transcript of his remarks: "We are developing this very, very quickly, taking DIRECTV Now and leveraging it into a scalable platform that goes into the home as the primary service. We are launching a beta of this in the fourth quarter of this year. And you will see us begin to roll the service out as we get into 2018."
The odd thing about AT&T's new OTT initiative is that it's not clear what it offers that DirecTV Now doesn't already provide. Users can already watch DirecTV Now content on a TV using devices like the Roku and Amazon Fire TV. And AT&T isn't promising some fancy new hardware with optimizations for video streaming. If anything, a thin-client box from the telco would represent a step backward from retail alternatives because in addition to being a dumb terminal, it would presumably only offer a walled garden of content.
Then there's the fact that AT&T already has millions of DirecTV satellite dishes out in the field. Stephenson hasn't suggested that AT&T will try to replace those overnight, but investing in separate in-home hardware is still an expense that the current DirecTV Now offering doesn't require.
Where Stephenson does begin to make sense on the OTT front is in his vision of using a cloud-based platform to segment the TV experience based on what different consumers want to watch. The cloud, as so many have discovered, gives TV providers tremendous flexibility to introduce new services and also quickly tailor those offerings by content, price and add-on features.
Stephenson also touts the financial benefits of offering addressable advertising as more of the industry ecosystem moves to IP and software-based management systems. The new OTT platform is only part of that wave, but given the amount of ad inventory AT&T has to sell -- currently pegged by Stephenson at 200 billion impressions, with room to grow to close to 1 trillion impressions if the Time Warner deal closes -- the telco has every reason to chivvy the addressable advertising trend along as quickly as possible.
And shifting more customers from satellite networks to IP-based TV should do just that.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading