AT&T has not revealed pricing and content packaging for a set of over-the-top video services it will launch in Q4, but a top exec at the company said it’s incorrect to characterize the lead offering of the batch, DirecTV Now, as a “skinny” bundle.
“It is a rich bundle of content; it’s not a skinny bundle of content,” John Stankey, CEO of AT&T Entertainment Group and the exec leading the integration of AT&T and DirecTV, said Wednesday at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.
In fact, Stankey’s not a big fan of the skinny bundle at all. “We think skinny bundles have a very small application in the market over time,” he said.
DirecTV Now, Stankey said, “is about getting that middle road” – between the traditional premium pay TV bundle and slimmed-down offerings, but offered at an attractive price point and improved acquisition infrastructure that does not require a heavy investment in CPE (consumer premises equipment).
Stankey also shed more light on the other two DirecTV-branded OTT products that will be rolled out.
DirecTV Mobile will take things a step further as a service that is even less expensive, but centered on on-demand viewing that offers a library of premium content. “That market has not been addressed well,” he said.
DirecTV Preview, the free, ad-supported offering, will provide good content “outside the paywall,” giving consumers a chance to sample and try the company’s video products.
With all three together, AT&T will go after the 20 million homes or so that are not part of the pay TV ecosystem today. While that does include cord-cutters and cord-nevers, it also covers people with “transient lifestyles” that can’t get access to the traditional pay TV infrastructure, Stankey explained.
“We think there’s an opportunity to broaden distribution with the right products and the right kind of cost structure.”
And OTT represents a third distribution conduit alongside satellite and managed IPTV (U-verse TV), but the aim is to operate them all on a common system.
AT&T’s plan is to support all of those entertainment products with a unified middleware and software platform, something that is seemingly akin to Comcast’s strategy with X1.
The first step along that path, Stankey said, is to get that nailed up for the OTT service and then to start the migration on the legacy U-verse and satellite TV services, giving AT&T agnostic access over managed and unmanaged distribution systems.
“Technically, that’s not an insignificant feat,” he said.
Earlier in the discussion, he acknowledged that AT&T has “a lot of platform work to do.”
“We didn’t buy DirecTV because we want satellite exclusively as a distribution medium,” Stankey said. “We bought it because it gave us scale in entertainment, and scale in distribution of entertainment.”
Stankey was not overly concerned about the readiness of the programmers for the OTT side of the equation.
DirecTV Now, he said, is the easy one because it’s about getting their content distributed to a new portion of the market, and “that’s good for everybody.” DirecTV Mobile is more challenging because it's VOD-focused and, therefore, has more tradeoffs.
