AT&T is joining the over-the-top video race, with plans to launch three Internet TV services from DirecTV — including a free, ad-supported option — in late 2016.
For now, the announcement amounts to AT&T planting a flag in the OTT turf: The company isn’t announcing pricing or what content will actually be available in each of the packages.
The new services, available on connected devices without the need for a satellite TV dish or set-top box, will include much of what is available from DirecTV today, AT&T says. That will include live and on-demand programming from TV networks, plus premium add-on options.
“We think there’s a segment of consumers here who have either left the (pay TV) ecosystem, or have never been in the ecosystem, that can be served by an operator with the breadth and depth that we deliver,” said Tony Goncalves, SVP for strategy and business development AT&T Entertainment Group.
“This isn’t a packaging exercise,” he added. “This is an exercise in the extension of pay TV.”
According to AT&T, the telco has secured initial content for the services and is in discussions with other programmers about deals to round out the offering. But whether that means popular networks like ESPN or HBO will be in the mix remains to be seen.
The new services will come after the launch of Dish Network’s Sling TV, which had signed up an estimated 500,000 subscribers for the lower-cost bundles as of the end of 2015, and Sony’s PlayStation Vue, which has a bigger lineup of channels and is aimed at competing with traditional pay-TV services.
AT&T’s new DirecTV OTT plans will be “affordable,” the telco says. Each service will come with a pre-set number of simultaneous sessions; it’s worth noting that Sling TV allows only a single stream per account.
The three new OTT services are:
- DirecTV Now, comprising a range of content packages, letting customers access the service over a wired or wireless Internet connection and on Internet-enabled devices;
- DirecTV Mobile, a “mobile-first” service for consumers who want to watch premium video and made-for-digital content directly on a smartphone, regardless of wireless provider; and
- DirecTV Preview, a free, ad-supported service for anyone with a wired or wireless Internet connection featuring some of the programming available on DirecTV today, including originals from the AT&T Audience Network and millennial-focused video programming from Otter Media, a joint venture of AT&T and the Chernin Group.
The ad-supported DirecTV Preview service appears in part to be a kind of sampler package, intended to get users to upgrade to one of the premium offerings. It’s also likely aimed at Verizon’s Go90 mobile video service, which includes a mix of licensed TV programming and original series from digital creators.
“These new video subscription models reflect the flexible content choices, viewing options and simple, transparent pricing that consumers want,” said John Stankey, CEO of AT&T Entertainment Group, in announcing the OTT packages. “These offers will provide a broad range of customers with greater freedom and choice to watch, binge and even buy premium content, regardless of how and where they enjoy their entertainment.”
The mobile TV opportunity specifically is a big one, according to Goncalves, noting that AT&T has some 130 million mobile subscribers. “We’re in their pockets on any given day, and we have multiple connection points where we can introduce the option of a premium entertainment experience,” he said.
DirecTV’s previous attempt in the OTT space fizzled out. The satcaster in December 2014 launched Yaveo, a $7.99 monthly service aimed U.S. Hispanic consumers with partners including Univision Communications and Viacom. But DirecTV pulled the plug on the service at the end of 2015.
The new DirecTV Now and DirecTV Mobile services will target price-sensitive consumers who aren’t interested in paying for a conventional pay-TV service. AT&T said it will continue to provide DirecTV’s satellite TV service, which includes the exclusive NFL Sunday Ticket package. The telco also will continue to offer its U-verse TV and Internet services.
So far, cord-cutting hasn’t dramatically hampered DirecTV’s growth. The satellite TV service added 214,000 U.S. subscribers in the fourth quarter of 2015. In the same period, however, AT&T’s U-verse TV business shed a net 240,000 subs. As of the end of last year, AT&T had 25.4 million total TV customers, comprising 19.78 million for DirecTV and 5.61 million for U-verse.
With the new DirecTV Internet-delivered services, “when our own customers are opting out (of pay TV) we will have an option for them,” Goncalves said.
