AT&T launched its over-the-top streaming service DirecTV Now today at a press event in New York City, but the final elements of the offering, as well as many aspects of the environment within which the telco will introduce its OTT product, are still being decided.
AT&T also announced November 21st they signed an agreement to bring on Fox content to the DirecTV Now package. This includes numerous channels: Fox News Channel, Fox Business Network, FX, 18 Fox regional sports networks, and more.
It is undecided though how AT&T will incorporate the Fox programming into its new service. CEO Randall Stephenson announced in October that DirecTV Now will sell for a baseline price of $35 per month, and the company has added that the OTT product will feature more than 100 channels, including live and on-demand programming.
It is still unconfirmed which content will be provided through the basic DirecTV Now package and which content will be sold in the premium packages, but content has been confirmed by AT&T. Content includes: Walt Disney Co., Viacom, HBO, Scripps Networks, and others.
AT&T also allured to the fact if it acquires Time Warner Inc. it will get additional programming from their network lineups as well.
Pricing and Profit for AT&T
The $35/month price point means thin profit margins for the DirecTV Now offering. Randall Stephenson did say the low price wouldn’t have been possible at all without the acquisition of DirecTV and the programming agreements that transaction brought with it.
However even with the licensing rates achieved through DirecTV’s buying power, AT&T will have to walk a fine line on making DirecTV Now appealing to consumers without jeopardizing the traditional DirecTV packages that come at a higher price.
AT&T said they are likely to try and drive a greater profit through new advertising strategies and they are working to increase the attractiveness of DirecTV Now by exempting any video that its consumers stream with the service from monthly mobile data caps.
The FCC brought about concerns that the “zero rating” idea could be looked at as anti-competitive. AT&T responded to the FCC’s concern saying it offers the same zero rating options that it uses for its own mobile video services to other content providers.
AT&T has take on multiple acquisitions over the last year to dip their toes into the cable space while keeping rank in their mobile space. This could cause an influx in demand which in turn could cause real infrastructure investments to keep up with that demand.
How will this begin to affect other cable MSO’s and their acquisition of possible new content? And how will this affect AT&T’s mobile side of things with taking on a whole new medium?
Time always tells all.