AT&T currently markets standalone over-the-top video services DirecTV Now and Watch TV — the latter offering mobile access to 30 pay-TV channels for $15 monthly and no long-term contract.
Watch TV has generated about 500,000 subscribers since its debut last June. DirecTV Now, which jettisoned more than 260,000 subs after ending promotional pricing late last year, has about 1.6 millions subs.
The telecom now appears to be considering ad-supported VOD — long a stepchild to subscription streaming VOD service such as Netflix, Amazon Prime Video and Hulu.
With Amazon subsidiary IMDb.com launching a free ad-supported VOD service, Hulu’s basic SVOD plan featuring commercials, and Comcast launching AVOD for Xfinity subscribers in 2020, AT&T is pondering ad-supported distribution for select content from subsidiary WarnerMedia.
Speaking on the Jan. 30 fiscal call, CEO Randall Stephenson reiterated that companies with “very strong” IP, “deep libraries” of IP are the ones that are going to succeed over time.
He said Warner Bros. CEO Kevin Tsujihara and WarnerMedia boss John Stankey have been analyzing optimal distribution channels and license opportunities for content.
Tsujihara helped craft the recent non-exclusive license extension with Netflix for “Friends,” a deal that lets WarnerMedia stream the venerable sitcom through its pending SVOD service launching later this year.
Stephenson said WarnerMedia content would be targeted toward what he called “two-sided” business models that include SVOD and AVOD.
“There’s a demand and the customers have become accustomed to advertising free subscription services,” he said. “And we think HBO and a lot of the Warner content [is] premium content will fit into that mold.”
While Stephenson didn’t reveal AVOD specifics, he said the recent acquisition of Xandr to help sell targeted digital advertising to AT&T’s 170 million mobile and broadband subscribers, underscored opportunities for advertising-supported models that help keep content (i.e. catalog) prices down, keep consumer costs down and help fund additional content acquisition and purchasing.
“Xandr is a big part of making that model work,” he said. “So, our model will be a two sided model, with a heavy subscription service, with some ad-supported elements to it as well.”