AT&T Launching New OTT Video Service in Q4 2019

AT&T Oct. 10 disclosed it plans to launch another over-the-top video service in the fourth quarter of 2019.

The telecom, which acquired Time Warner (HBO, Warner Bros., Turner) in part to deliver content via direct-to-consumer video strategy, operates online TV service DirecTV Now and plans to bow AT&T Watch, a $15 monthly sports-free online TV service.

“This is another benefit of the AT&T/Time Warner merger, and we are committed to launching a compelling and competitive product that will serve as a complement to our existing businesses and help us to expand our reach by offering a new choice for entertainment with the WarnerMedia collection of films, television series, libraries, documentaries,” CFO John Stephens wrote in a regulatory filing.

Stephens said the OTT video service and WarnerMedia content would create “a compelling product” for pay-TV distributors looking to increase consumer penetration of their bundled channel packages.

“It would help us successfully reach more customers,” Stephens wrote.

The executive said he expects financial support for the OTT video service to come from a combination of incremental efficiencies within the WarnerMedia operations, consolidating resources from sub-scale direct-to-consumer efforts, library content, and technology re-use.

“We expect to defer some licensing revenue to later periods in the form of increased customer subscription revenue,” he wrote.

 

Online TV Services Added 868,000 Subs in Q2

Online TV services such as Sling TV, DirecTV Now, Philo TV and PlayStation Vue added a combined 868,000 subscribers in the second quarter, bringing the total number of virtual MVPD subs to 6.73 million, up 119% year-over-year, according to new data from Strategy Analytics.

Despite this, overall pay TV subs (cable, satellite, telecom and online TV) fell to 93.78 million, breaking a string of two consecutive quarters of growth, according to the report that examines the subscriber bases of 27 public traded and private pay TV operators, accounting for 97% of all pay TV subscriptions.

“While the entire [online TV] segment is growing, AT&T’s DirecTV Now deserves special notice given how rapidly it has grown in a fairly short period of time,” Michael Goodman, director, television and media strategies, said in a statement. “If it continues on its current growth trajectory it will overtake Sling TV as the largest vMVPD in early 2019.”

In comparison, 2Q was not particularly kind to legacy pay TV providers as they lost nearly as many subscribers (973,000) as the prior two quarters combined (-1.16 million). In the quarter, total legacy pay TV subscriptions fell to 87.05 million, down 3.6% from the previous-year period.

“Historically, pay TV in the U.S. has consisted of cable, satellite, and IPTV; however, the introduction of over-the-top pay TV services, commonly referred to as vMVPDs, necessitates a change in our thinking,” said Goodman. “What we have commonly referred to as pay TV (cable, satellite, and IPTV) should now be referred to as Legacy Pay TV, while the definition of Pay TV should include vMVPDs.”

Pay-TV Q2 Sub Loss Lowest Since 2014

Pay-TV operators, including cable, satellite and telecom, lost about 800,000 video subscribers in the second quarter – down from 930,000 subs in the previous-year period, according to new data from the Leichtman Research Group.

The losses were offset by ongoing gains in online TV services such as Sling TV, DirecTV Now and Spectrum TV Plus, which totaled 385,000 subs.

Leichtman found that the largest pay-TV providers in the U.S. – representing about 95% of the market – lost about 415,000 net video subs in Q2.

Specifically, satellite operators Dish Network and DirecTV shed 480,000 subs – the largest in any previous quarter.

The top six cable companies lost about 275,000 video subs compared to a loss about 190,000 subs in Q2 2017.

Telecoms lost about 45,000 video subs, compared to a loss of 270,000 subs last year.

The top pay-TV providers now account for about 91.3 million subscribers – with the top six cable companies having 47.4 million video subs, satellite TV services 30.6 million subs, the top telecoms 9.1 million subs.

Online TV services Sling TV and DirecTV Now have 4.2 million combined subs.

“This marked the fewest net losses [among pay-TV operators] in the traditionally weak second quarter since 2014,” Bruce Leichtman, president and principal analyst for Leichtman Research Group, said in a statement.

Leichtman said the rise in online TV is both a product of consumers opting for more economical services, as well as changes in providers’ strategies.

“This newer segment of the industry has helped to mitigate overall pay-TV losses, while also contributing to a share shift from traditional services,” he said.

Sling TV Subscriber Growth Slowing

Dish Network Aug.3 reported that its pioneering online TV service, Sling TV, ended the second quarter (ended June 30) with 2.344 million subscribers – marginally more than the 2.3 million subs reported at the end of Q1.

The satellite TV operator launched Sling TV in 2015 as the first standalone online TV service, and first platform offering access to premium TV channels outside of the traditional linear bundle, including ESPN.

The market now includes Sony PlayStation Vue, DirecTV Now, YouTube TV, Philo TV, Spectrum TV Plus, Hulu Live TV, Fubo TV and AT&T’s WatchTV.

Dish said it added 41,000 Sling TV subs in the Q2, down from about 91,000 sub additions in Q1. The company closed Q2 with 10.653 million Dish TV subs. When combined with Sling TV, Dish ended the period with 12.997 million total pay-TV subs compared to 13.332 million pay-TV subs in the previous-year period.

Indeed, Dish lost 335,000 net subscribers in the period compared to 196,000 subs in the last year’s period. Lone improvement: annual monthly churn rate dropped to 1.46% versus 1.83% for second quarter 2017.

 

AT&T: DirecTV Now Sub Gains Offset Declining Pay-TV

Online TV service DirecTV Now added 342,000 subscribers through the end of the second quarter (ended June 30), up from 152,000 subs added in the previous-year period.

The platform, which added a new user interface and cloud-based DVR in the quarter, now has more than 1.8 million subs compared to less than 500,000 last year.

The gains offset ongoing subscriber declines at DirecTV and U-verse, which totaled a combined 262,000 subs. AT&T’s entertainment group ended the period with 25.4 million subs – up slightly from 25.2 million last year, which includes 20 million (DirecTV), 3.7 million (U-verse) and 1.8 million (DirecTV Now).

“The customers we lost, the cord-nevers, the cord-cutters, we’ve replaced with products that are in their affordability range,” John Donovan, CEO of AT&T Communications, said on the fiscal call.

Broadband subs increased to 13.7 million from 13.2 million last year, underscoring AT&T’s rapid deployment of OTT video platforms, including the June 28 bow of WatchTV, a $15-a-month stand-alone service.

WatchTV features 30+ live channels and is compatible on virtually every current smartphone, tablet or Web browser and certain streaming devices. In addition to live programming, WatchTV includes more than 15,000 TV shows and movies on demand.

Donovan said subscriber-acquisition costs, operational costs, including deployment, are much less than linear TV.

“Over time, as we build those [OTT video sub] volumes, those are products that will get scalable margins,” he said.

AT&T said consumers continue to choose higher broadband speed tiers. About 68% of all broadband subs have purchased speed tiers between 18 megabits and 1 gigabit. Half of all broadband subs on AT&T’s fiber network have speeds of 100 megabits or more. Subs with speeds of 100 megabits or faster have more than doubled year over year.

 

Reese Witherspoon Launching SVOD Channel on DirecTV Now

Oscar-winning actress Reese Witherspoon is joining the over-the-top video universe.

Witherspoon’s Hello Sunshine production company is bowing two reality-based series on a branded channel via AT&T’s DirecTV Now OTT platform and the telecom’s old-school U-verse pay-TV channel.

The Hello Sunshine channel is available for $10 monthly for three months, after which it jumps to $35 a month.

Beginning July 17, “Shine On with Reese,” follows the “Big Little Lies” star as she interviews successful women, including Dolly Parton, Ava DuVernay, Pink, poet Cleo Wade, Sprinkles founder Candace Nelson and Spanx founder Sara Blakely, author/activist Glennon Doyle and World Cup soccer star Abby Wamback, among others.

“Shine On’ is about experiencing with Reese the stories of exceptional artists, entrepreneurs and leaders who happen to be women, and reveals how their personal journeys are unique yet relatable,” Charlotte Koh, head of digital media and programming at Hello Sunshine, said in a statement. “It epitomizes our goal of telling unexpected stories from interesting women’s perspectives.”

The second series – “Master the Mess” – about dealing with household clutter and hoarding, begins streaming/airing Sept. 4.

Decluttering gurus Clea Shearer and Joanna Teplin are The Home Edit, a Nashville-based business that blends comedy with organization. The Home Edit team tackle the pantries, closets, bathrooms and laundry rooms of overwhelmed families.

“Providing an empowering platform for diverse voices is a priority for us,” said Valerie Vargas, SVP advertising and creative services at AT&T. “Our work with Hello Sunshine gives stories about women the spotlight they deserve, which inspires our viewers and drives authentic conversation.”

Viewers can go to att.com/hellosunshine for a sneak peek at the first episode.

 

 

Online TV Service Philo Bows on Apple, Amazon Devices

Upstart online TV service Philo July 10 announced it is now available on Amazon Fire TV and Apple TV, giving subs access to 40 pay-TV channels for $16 per month.

The San Francisco-based service also announced that it has raised more than $40 million from existing investors with AMC Networks, Discovery and Viacom leading the company’s Series C round of funding.

Amazon Fire TV and Apple TV add to the list of platforms Philo is available on, including Roku devices, desktop and Web browsers, iPhones, and Android devices via Chrome (native app coming soon), as well as more than 35 participating TVE apps.

“The expansion onto Amazon Fire TV and Apple TV is a natural extension for us and allows many new people to discover and enjoy Philo, as well as expanding the viewing options for our existing subscribers,” CEO Andrew McCollum said in a statement.

With this new round of funding, McCollum said the service would invest in product features/enhancements and expand marketing efforts. The company is also developing additional innovations, including a socially-driven TV experience.

Currently, Philo subs can watch on up to three different devices at the same time; an unlimited 30-day DVR, an on-demand library, pause any live channel, start programs from the beginning, and watch programs that have aired in the past three days; and a streamlined interface, intelligent search, and the ability to send shows to connected friends.

 

 

AT&T Set to Bow ‘Very Skinny’ TV Bundle This Week

Fresh off its $85 billion acquisition of Time Warner, AT&T this week will formally launch an online TV service free to its unlimited wireless subscribers; $15 monthly on any other platform.

Dubbed “AT&T Watch TV,” the service differs significantly from $35 monthly DirecTV Now since programming is limited to Turner (TBS, TNT, CNN, Cartoon Network) content and no live sports.

The burgeoning online TV market featuring premium pay-TV channels without a long-term contract also includes Dish Network’s Sling TV, Sony’s PlayStation Vue, Google’s YouTube TV and Charter’s Spectrum TV Plus.

“There’s going to be opportunities to distribute premium video like we never imagined,” CEO Randall Stephenson told CNBC. “The tech companies are just demonstrating that to us. So, we want to participate in this.”

Content distribution is what fueled AT&T’s acquisition of DirecTV, the subsequent launch of over-the-top video platform DirecTV Now and most-recent purchase Time Warner, which includes Warner Bros., HBO and Turner.

Last month, AT&T launched new capabilities and options for DirecTV Now, including an updated user interface. Subscribers can add a third simultaneous stream for an additional $5 per month and will get a beta version of cloud DVR functionality with 20 hours of free storage. This summer, AT&T plans to roll out an option to purchase 100 hours of storage for $10 per month.

The company also plans to launch a broadband-based premium SVOD service aimed at competing with traditional linear TV products for in-home use, John Donovan, CEO of AT&T Communications, told an investor group in May.

The product will be app-based with a small device that connects to customers’ TVs and home broadband. The ($80-$90 monthly) service will offer the content available on traditional linear TV with a great user experience and lower price points.

“We won’t roll a [service] truck. The CPE [customer premises equipment, or network, set-top box, etc.] will be cheaper and have lower operating costs,” Donovan told the MoffettNathanson Media & Communications Summit in New York.

 

 

 

AT&T Ups OTT Video PR Campaign

As AT&T awaits a federal judge’s June 12 decision on the merits of the government’s antitrust litigation involving the telecom’s $84.5 billion acquisition of Time Warner, its executives have been busy talking to Wall Street.

AT&T contends the merger — which includes Warner Bros., Turner and HBO — will cut $1.5 billion in annualized operating costs between the two companies. Of course, AT&T is on the hook to Time Warner for $1 billion should the deal not be consummated.

On the regulatory front, AT&T CFO John Stephens May 30 told Cowen’s Technology, Media and Telecom Conference the telecom would (shockingly!) not contest an appeals court decision in February granting the Federal Trade Commission oversight on the Internet in the U.S.

In video, AT&T said it plans (pending the Time Warner merger) to introduce “AT&T Watch,” a $15 monthly skinny package without local programming or expensive sports. It would include Turner programming.

“You can serve another customer segment,” Stephens said.

By the end of the year, the company also expects to launch an online TV “experience” that will compete with linear TV for in-home use. The product will be app-based with a small proprietary streaming media device that connects to customers’ TVs and broadband. This service will offer the same content as linear TV with a “great user experience and lower price points.”

“We’ve had a period of a year-and-a-half where we’ve learned what customers want and what works on the [OTT video],” Stephens said.

This might seem at odds with DirecTV Now, the telecom’s much-publicized online TV service that affords users access to premium pay-TV channels starting at $35 a month – which Stephens said is increasing to $40.

If the merger with Time Warner is about cost synergies, why clutter the TV landscape with confusing (and competing) properties?

“Because we’ve been able to take a different customer segment and treat it, and be very successful at it,” Stephens said, adding that the pending OTT product would not require a service “truck roll” to the consumer’s residence or costly installation.

“That’s a lower subscriber acquisition cost while expanding the market,” he said.

The executive said advertising would play a big role in sustaining the new video properties and noted the vast ad inventory AT&T would have across its platforms following the Time Warner acquisition.

The CFO said AT&T will be able to offer more targeted advertising using data from its broad base of mobile and video subscribers, as well as subscribers to other properties like Otter Media, HBO and Turner Digital.

“You can see where you could add significant amounts of revenue to the [OTT] product, away from the customer,” Stephens said.

Research: Customers More Satisfied With Video Streaming Than With TV Subscription Services

Customer satisfaction with video streaming services far eclipses that of subscription TV service, according to the American Customer Satisfaction Index (ACSI) 2018 Telecommunications Report.

Video streaming services debuted in this year’s telecom report with an ACSI score of 75, well above subscription TV’s score of 62, which declined 3.1% from last year.

“Video streaming services significantly outperformed subscription TV,” said David VanAmburg, managing director at the ACSI, in a statement. “Streaming services don’t have the hidden fees and six-month rates that subscription TV does, not to mention they’re cheaper and simpler. But because consumers don’t have many options when choosing a subscription TV provider, those businesses don’t see a lot of risk in customer dissatisfaction, and we’re unlikely to see dramatic changes any time soon.”

The American Customer Satisfaction Index (ACSI) measures and analyzes customer satisfaction with more than 380 companies in 46 industries and 10 economic sectors. Reported on a scale of 0 to 100, ACSI scores are based on data from interviews with roughly 250,000 customers annually. The ACSI Telecommunications Report 2018 includes data on subscription TV services, video streaming, video-on-demand, internet service providers, fixed-line and wireless telephone services, and cell phone manufacturers. It’s based on 45,292 customer surveys collected between April 19, 2017 and March 17, 2018. The full report is available for download here.

With an ACSI score of 75, video streaming services were the highest-performing telecom industry measured in the 2018 study. Netflix, Sony PlayStation Vue, and Twitch all led the pack, tying at a score of 78. Apple iTunes and the Microsoft Store took second place at 77, with YouTube Red in third at 76.

Amazon Prime Video, Google Play, Hulu, and Vudu all registered at the industry average of 75, followed by the network channel subscriptions: CBS All Access at 74, and HBO Now and Starz at 72.

Bringing up the rear were Sling TV (71), DIRECTV NOW (70), Showtime Anytime (70), and Sony Crackle (68).

Still, even Sony Crackle in last place rated higher than nearly all subscription TV services.

Video streaming services received high marks for ease of understanding the bill (80), website satisfaction (80), and call centers (75), but customers downgraded them on availability of the current season’s TV shows (71) and availability of new movie titles (69).

Customer satisfaction with subscription TV fell to 62, an 11-year low for the industry.

AT&T’s U-verse TV topped the list with a 70, one of only two scores that stayed the same instead of dropping. Verizon Fios fell 4% year over year to a 68 for second place, while DISH Network held steady at 67 for third.

In the middle of the pack, DIRECTV and Optimum both fell 6% to 64 and 62, respectively. Cox Communications shed 2% to 60, while Spectrum and Suddenlink both plunged 8% to 58.

Comcast Xfinity decreased 27% to 57, Frontier Communications dropped 7% to 56, and Mediacom placed last with a 55, down 2%.

The top-rated part of the subscription TV experience was HD picture quality, which holds steady at a score of 80. Picture quality was close behind, down 1% to 78.

While courtesy and helpfulness of store and service center staff had a relatively good score of 77, and speed of store and service center transactions received a 76, call center satisfaction continued to be the weak spot of the industry, slipping 3% to 63.

“If you look at retail, airlines, and many other industries, companies like to reward customer loyalty, offering perks or discounts for doing business with them,” said VanAmburg in a statement. “Telecom is the exact opposite. In many ways, loyalty is punished because subscription TV is focused on customer acquisition and offering the best deal to lure customers away from competitors. In the long run, that doesn’t leave customers very satisfied.”

Among video-on-demand services, AT&T’s U-verse TV took the top spot with a 74, followed by DISH Network at 73, and Verizon Fios at 72. At 70, AT&T’s DirecTV came in far below its U-verse offering, but ahead of the industry average.

Optimum led all cable companies in video-on-demand at the industry average of 68, while Cox Communications and Xfinity tied at 67, and Spectrum came in last at 64.

Video-on-demand viewers were pleased with the number of TV shows (75), current seasons (74) and variety by category (74) available. However, the availability of a past season’s shows was lacking (69) as were free on-demand content (69) and new movie titles (68). Call centers received the lowest marks (67), but call center service performed better for on-demand customers than for internet and subscription TV.

While video streaming services received much better customer satisfaction scores than subscription TV, obviously viewers still need internet access to get it. Unfortunately, internet service providers (ISPs), along with subscription TV, had the lowest customer satisfaction of all industries tracked by the ACSI.

ISPs were down 3.1% to 62, and while customers clearly weren’t satisfied with their service, more than half of Americans had only one choice for high-speed broadband. Every major ISP deteriorated this year except Xfinity, which remains unchanged.

Verizon Fios stayed in first place at 70 after a 1% dip. AT&T Internet also fell 1% for a second-place score of 68, followed by Optimum, which dropped 6% to 64.

Suddenlink and Spectrum both plummeted 8% to 61 and 60, respectively, followed by Xfinity, unchanged at 60. Mediacom placed last with a 53 after a 9% fall from last year.

Call center satisfaction, already low, fell another 3% to 59. Customers were also less satisfied with overall data transfer speed, which sank 3% to 67, and the variety of internet plans available, which fell 3% to 64. The one bright spot was courtesy and helpfulness of store and service center staff and speed of store and service center transactions, at 76 and 74, respectively, though both were down from last year.