nScreenMedia OTT multiscreen media analysis

AT&T’s DirecTV Now, Mobile and Preview: risky but required move

DirecTV Now splash

AT&T announced it would launch a trifecta of direct-to-consumer OTT services later this year: DirecTV Now, DirecTV Mobile and DirecTV Preview. Though risks abound for AT&T, it’s a step into the future for the DirecTV brand.

The services AT&T plans to launch approach the OTT market in three distinct ways:

  • DirecTV Now: a subscription video service populated with DirecTV’s traditional satellite TV fare
  • DirecTV Mobile: a subscription video service available over any mobile data network featuring premium content and web originals
  • DirecTV Preview: a free-ad-supported video service available over any data network with a mix of TV and web originals.

DirecTV Now appears to be a peer service to the UK satellite broadcaster Sky’s Now TV. Part of Now TVs successful formula has been the level of flexibility UK customers have to gain access to the content. It is doubtful that DirecTV will be able to match it. Sky was able to leverage its own channels, Sky Sports and Sky Movies, to seed Now TV, and clearly has more favorable rights with the content than the typical US operator. For example, Sky allows customers to subscribe to Sky Movies on a monthly basis, or watch all the Sky Sports channels a day at a time. No US broadcaster could do this with ESPN or Showtime.

AT&T will likely have to negotiate new TV license agreements for the content in DirecTV Now. That means it will either end up looking a lot like Sling TV, with its skinny bundle plus add-on packs, or like Playstation Vue, with the traditional big bundle at a high price. Given that AT&T says it wants to target the 20M or so households that don’t have pay TV, Sling TV looks to be the more likely model for DirecTV Now.

DirecTV Preview and Mobile appear to be AT&T’s answer to Verizon’s Go90. Go90 is available for free to anyone, but some of the content provided can only be watched by Verizon Wireless customers. For example, primetime and local NFL games are exclusive to Verizon customers.

AT&T has decided to separate out the premium and general content into two separate services. DirecTV Preview is a free ad-supported service and is available to anyone on fixed or mobile networks.  It will include a mix of web originals and some DirecTV content, including shows from the Audience Network like Kingdom and The Undeniable Joey Buck.

DirecTV Mobile is available to anyone with a wireless data plan, regardless of carrier. It will require a subscription, and provide premium video and web originals. Again, AT&T is targeting price sensitive consumers, so look for a sub-$10/month price point.

AT&T may be able to differentiate DirecTV Preview and Mobile from Go90 because of its investment with new media power house The Chernin Group in Ellation and Otter Media. This should smooth the negotiations for the inclusion in DirecTV Preview and Mobile of properties like the subscription anime network Crunchy Roll, and Fullscreen’s stable of YouTube stars, like Shane Dawson and The Fine Bros.

These are risky, but necessary, moves by AT&T and DirecTV. Where Sky has seen little cannibalization of satellite customers by Now TV, the pool of customers without pay television in the UK is much larger than in US. If DirectTV Now is at all interesting, it is liable to enable some pay TV cord (or dish) cutting. Tony Goncalves, SVP for strategy and business development AT&T Entertainment Group, was sanguine about the possibility of enabling cord cutting. He said:

When our own customers are opting out <of subscribing to pay TV> we will have an option for them.”

One could argue he has nothing to lose since Sling TV is already in the market, and by all accounts growing strongly at the cost of traditional pay TV subscribers.

Go90 still has much to do to prove its market viability, so DirecTV Preview and Mobile step into uncharted territory. The viability of exclusively mobile subscription video services is still in question, and the ability of free-ad-supported video aggregation services to attract gen-Z and millennial audiences is unproven.

Why it matters

Everybody in the US that wants pay TV under the existing business terms has it.

There is an emerging opportunity online to engage consumers with video under new business terms.

While online providers like Netflix and Crackle have moved on this opportunity, pay TV operators have been slow to enter the market.

DirecTV is tackling the problem head on with three new OTT video services.

Facebooktwittergoogle_plusmailFacebooktwittergoogle_plusmail

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.