On-demand streaming services like Netflix and Amazon Prime have already transformed the way content is being delivered and consumed– with AT&T’s merger with DirecTV in 2015, they seem to now be ready to enter the market and compete more directly with on-demand streaming. AT&T recently announced that they would be offering streaming services with the DirecTV Now service. This service does away with the requirements that used to be in place to offer users broadband agnostic, dish-less, and cable subscription agnostic streaming services. This offering seems to be creating a hybrid between cable packages (with claims that the selection will be robust, as opposed to the more limited packages that their competition includes) and streaming services without the regular installation and contracts associated with traditional cable or dish services.

AT&T plans to offer three different flavors of the new service: two monthly subscription based options (DirecTV Mobile, for smartphone use only; DirecTV Now, for use across devices) and a free app called DirecTV Preview which offers a limited selection of shows (akin to Hulu and Hulu+). The biggest differentiator for AT&T will be the ability to offer more traditional channel packages, as well as live content – they’ve reported that the breadth of options will be similar to what is offered through DirecTV today. The only other prominent player in a carrier/content creation relationship would be Comcast and NBCUniversal. NBC has approached the streaming space with very niche products, such as SeeSo which acts like a comedy “channel” featuring TV shows, movies, and a touch of original content. This seems to be a response to consumers pushing for more à la carte options in their channel choices, but clearly NBC is somewhat limited in the shows and content that they can make available.

Details on what channel offerings and how premium channels and packages, e.g. HBO and Showtime, NFL Sunday Ticket, will be offered through DirecTV Now have not yet been addressed; coming to consumers with the right mix of these offerings will be critical to gaining market share in this space. Consumers are currently accessing content from multiple sources and many need to have a cable contract or subscription in place for access to premium channels and packages, so if AT&T does away with that requirement it would be pretty impactful in the market. It will also be interesting to see how AT&T does in this arena with relatively established streaming services in play – likely they’ve stayed away from the space to avoid cannibalizing their cable and dish TV services and tie users to using their broadband/DSL services, but now seem ready to embrace the consumer requests (demands) to deliver more flexible and consumer-friendly offerings.

In the past, one of the major issues for carriers and streaming services has been the argument over net neutrality. In order to get approval for the DirecTV acquisition, AT&T – who has been openly against reclassification of the internet as a utility while also declaring that they are firmly against creation of “fast/slow lanes” – agreed to treat all incoming video the same (i.e. not favor DirecTV content) and provide regular reporting on interconnection agreements between AT&T and content providers like Netflix. As AT&T steps into direct competition with streaming companies, there is likely to be a very watchful eye on how they are counting and/or prioritizing data on their network. Netflix and Amazon Prime have also come out strong in recent years with award-winning original shows that have large followings to entice users to subscribe; AT&T currently offers original content through DirecTV’s Audience Network, but these shows seem to have less “buzz” as compared to others, e.g. House of Cards, Orange is the New Black, Transparent. If AT&T were to re-focus some of the energy used to fight over net neutrality to create more original, quality content, they may be well positioned to solidify their position in market.

AT&T is coming late to a game already in full swing, but has an opportunity to resonate with consumers who haven’t yet made the leap to a streaming service, those who are looking for a broader range of channels, and those who may be looking for a one-stop-shop for wireless, land line (if they still have one), internet, and cable/streaming. Watch for updates in Q4 of 2016 to get a better idea of price points and the competitive advantage that AT&T may bring to the “binge watching” table.

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Torey Guingrich

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