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AT&T CEO Not Worried About Streaming Video Cannibalizing Pay-TV

21 Sep, 2016 By: Erik Gruenwedel

Just months away from the launch of DirecTV Now, AT&T’s ambitious subscription-based online TV platform featuring more than 100 channels on a standalone monthly basis, CEO Randall Stephenson welcomes the possibility the new platform could siphon consumers away from linear pay-TV.

Speaking Sept. 21 at the Goldman Sachs Communacopia Brokers Conference in New York, Stephenson said the risk from new technology undermining existing infrastructure is omnipresent and welcomed.

“That means you have found something the market really wants,” he said. “We had this same conversation about wireless.”

Stephenson said new products that don’t risk cannibalizing existing distribution usually go nowhere — adding the consumer today is about one thing: video.

“We’re seeing them consume more video than they have ever consumed. And they’re consuming it across multiple platforms, multiple devices. I think we’re pretty good at managing these issues.”

Indeed, DirecTV Now is targeting the 20 million domestic broadband homes AT&T contends have eschewed linear pay-TV, opting instead to access content from mobile devices.

Stephenson said those broadband-only consumers had become “not terribly happy” about paying multiple times for the same content via pay-TY — or paying extra to see the same data on a mobile device or tablet.

“If they forget to DVR ‘Silicon Valley,’ the idea that I now have to go to Apple TV, iTunes or Hulu or wherever I’m gonna go, download it and pay for it again when I already paid for it on DirecTV. We have to solve that problem.”

Stephenson said the acquisition of DirecTV made AT&T (with U-verse), the largest pay-TV operator in the U.S., which he said afforded leverage with licensing content.

“We’ve been very aggressive about this over the last year. We can put together a product with fair, not thin, margin structure. Integrated with wireless and home broadband services.”

The CEO said most content programmers are still figuring out OTT distribution, adding they want viewership data AT&T and DirecTV can provide.

“We have millions of set-top boxes connected to the Internet and we’re able to get anonymous viewership data that is very instructive to new advertising models and even developing programming.”

Stephenson said 90% of content rights have been secured, including Disney, HBO, NBC and Discovery, among others. He said the majority of time is being spent perfecting the infrastructure and distribution so buffering issues that have plagued service like Sling TV and Charter Spectrum TV Plus during high-profile live events don’t happen.

“We want to this to be like a MVPD experience on the mobile device. In 2017, this is going to be a big driver of video for us.”


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