AT&T Has Its Mobile Video Moment
AT&T has big plans now that it has DirecTV under its roof.
At an AT&T Inc. (NYSE: T) analyst day yesterday, Senior Executive Vice President John Stankey outlined how the company expects to use the acquisition of the satellite TV operator to take consumers to multiscreen media nirvana.
Stankey emphasized AT&T's scale and the company's ability to use its IP video and broadband assets to develop a "premium, effortless entertainment experience delivered anywhere." Citing AT&T's mobile footprint, fixed broadband service and content relationships, he suggested that no other competitor can offer the type of integrated entertainment and connectivity platform that AT&T can.
"Comcast can't deliver that, neither can Verizon or those other wireless carriers, nor Netflix or the new entrants," Stankey said.
The path to an integrated service offering for AT&T starts with the combination of existing wireless and video packages, a move the company has already made by bundling DirecTV Group Inc. (NYSE: DTV) service with wireless family plans. According to Stankey, in a few short days, sales of the new bundled offering have already exceeded expectations. (See AT&T Starts DirecTV Era With New Bundles.)
However, AT&T sees its new advantage in scale leading to far more than cross-promotional selling. As part of the company's product roadmap, it plans to "bring legacy U-verse and DirecTV customers to a new and common customer experience with personalization features, user controls and the ability to integrate managed and unmanaged content." This means converging its current CPE platform and transitioning "to a more efficient software model in the future."
In a lot of ways, AT&T's strategy sounds similar to the one pursued by Verizon Communications Inc. (NYSE: VZ), if approached in a much different way. The shift to a New IP model will allow AT&T to make its video portable and maximize the advantage of its broadband network assets for distribution. (See Verizon Builds Toward OTT Launch .)
Stankey acknowledged that the pay-TV market is a mature one, but also noted that "extending the value of that [TV] subscription outside of the home and giving people access to content they want and allowing them to take capabilities with them including the portability of the DVR" is a great way to extend the value of that.
Interestingly, there may be some significant implications for Arris Group Inc. (Nasdaq: ARRS) in the product roadmap AT&T has planned. Arris is a key set-top supplier for the telco's U-verse service. If AT&T moves away from that CPE platform, that potentially eats into Arris's revenues.
On the other hand, Pace plc is the main set-top supplier for DirecTV, which means that if Arris succeeds in acquiring Pace, it could potentially offset revenue losses on one side with near-term gains on the other. (See Set-Tops Are Cash Cow in Arris/Pace Deal.)
The ultimate shift away from hardware altogether is a longer-term concern, but one that Arris is hedging toward with investments in cloud-based technologies. (See Arris & Pace: More Than Just a Set-Top Deal.)
As for AT&T, the telco has its own challenges ahead, include shifting business models and increased competition, but the company believes it has the assets it needs to overcome them, and to become a leader in multiscreen video.
Looking at their own plans and assets, however, that vision for success is one that Verizon, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and many others share.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading