U.S. telecom behemoth AT&T, Inc. T plans to offer a version of its DIRECTV satellite TV service through Internet which would not require customers to have a satellite dish, set-top box or annual contract.
The new service will lend users the ability to access and stream DIRECTV video services over a wired or wireless Internet connection from any provider and via any device.
The streaming service is slated to start in the fourth quarter of 2016. However, the company has not divulged much detail on pricing or programming, the two factors that will invariably decide the success of the service.
3 Streaming Options
The company will be offering three affordable video plans in order to appeal to all types of viewers, ranging from those who want the full package to a streamlined skinny bundle.The plans will be designed keeping in mind the choice and preferences of mainstream, mobile and young audiences. Notably, consumers will be able to watch videos by simply signingup for the service and downloading the app.
With DIRECTV Now, the company plans to offer a full range of live channels and on-demand shows. DIRECTV Mobile will be providing a package of premium and made-for-the-Web video particularly intended for smartphone users. Meanwhile, DIRECTV Preview is a free, ad-supported video service designed to attract teens and millennials.
Rationale Behind
Over the last couple of years, the internal dynamics of the U.S. pay-TV industry have been gradually shifting from cable and satellite TV operators to low-cost over-the-top service providers. The strong presence of online video streaming providers like Netflix and Hulu are posing significant threat to the existing pay-TV business model. Meanwhile, cord-cutting has become a serious threat for major pay-TV operators.
Thus, by providing increased value and flexibility via its Web video options, AT&T attempts to reach out to cord cutters who are ditching traditional pay-TV packages.
Meanwhile, AT&T will continue to provide DIRECTV’s premium satellite TV service along with its U-verse TV and Internet service.
Other Players
Apart from established giants like Netflix and Hulu, AT&T will also be facing severe competition from Alphabet Inc.’s GOOGL YouTube.
Meanwhile, DISH Network Corp. DISH forayed into the over-the-top video delivery market last year with the launch of its Internet TV service – “Sling TV”. Comcast Corp. CMCSA has also launched Watchable, its Internet TV service.
Notably, as the U.S. market matures and customer growth slows, video distribution is warming up as one of the next battlegrounds for the telecom industry and the wireless carriers are not lagging behind.
In Sep 2015, Verizon Communications Inc. VZ introduced its Internet-based mobile video service – “Go90” – specifically targeting the youth. Meanwhile, in Nov 2015, T-Mobile US, Inc. TMUS launched a video streaming service named ‘Binge On’ with unlimited access to various streaming services. The plan has been designed in a way that it doesn’t affect a customer’s existing data cap.
Our Take
The TV market is changing and AT&T is adapting by offering more choices to customers and meeting their needs.
Only recently, the carrier re-launched its unlimited wireless data plan, with a special focus on videos. The new plan provides unlimited data, text and call for $100 a month. However, the unlimited data plan is available only to those wireless customers who are subscribed to AT&T’s DIRECTV or U-verse TV service.
However, with its latest effort, AT&T is taking the first stride toward a national, application-based, over-the-top Internet video service which can be sold to people outside its TV and wireless subscriber base.
Meanwhile, it is to be seen how the new endeavor helps AT&T attract cord cutters by breaking from the traditional cable and satellite TV model and making a wide range of content available to anyone with an Internet connection.
AT&T currently has a Zacks Rank #3 (Hold).
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