OTT/Streaming

AT&T’s WarnerMedia direct-to-consumer subscription video on demand (SVOD) streaming service will actually include three separate service offerings, John Stankey disclosed Nov. 29 at an analyst meeting in New York. An entry-level service will be movie-focused, while a premium service will feature premium and popular original programming along with “blockbuster” movies, and a bundle service will combine the entry-level and premium offerings and add an “extensive library of WarnerMedia and licensed content” including classics, kids and family content, theatrical movies, comedy and “niche/genre” content, according to WarnerMedia.

The company plans to launch its initial D2C SVOD beta application in the fourth quarter of 2019, Stankey said, adding: “It’s got to be easily accessible. It’s got to be ubiquitous, over all devices – anywhere the customer wants to go.”

He didn’t provide a specific launch date or pricing, but said the entry-level version will be provided at a “very affordable price point.” Although “we really want the customer to want all three tiers,” he said, “we’re allowing them to work their way in.”

It will be a “scaled SVOD offer initially” that will focus on the company’s own content, he told analysts. But he said, “over time, growing third-party partnerships [will] bring additional content in that help augment those brands.”

The company will be working to develop the service over the first half of 2019 before launching it in beta form late next year, he said, adding the company intends to “fine-tune our implementation.”

The SVOD service “complements our existing business,” and will benefit its current long-standing distribution partners, he told analysts, predicting it “can actually be win-win for everybody involved.”

The service will also “expand the audience and increase engagement around its content; and provide data and analytics to inform new products and better monetize content,” AT&T said in a news release.
WarnerMedia’s D2C service will compete against Netflix and the upcoming Disney Plus D2C streaming service that’s launching in the U.S. late next year.

WarnerMedia’s offering was developed to take advantage of an “evolving” entertainment industry that’s “rapidly shifting towards digital consumption and spending,” while maintaining a D2C relationship has become “critical,” according to AT&T.

WarnerMedia is “well positioned with its existing wholesale distribution of content, combined with its plans” for next year’s SVOD service and “potentially an advertising-supported video on demand service in the future,” AT&T said. The company, meanwhile, may opt to shed its stake in Hulu, it indicated.

AT&T CEO and chairman Randall Stephenson was among the other company executives who spoke at the meeting, which was held to discuss the company’s overall strategy following the recently-completed – and long-delayed — purchase of Time Warner.

In AT&T’s Entertainment Group (its video and broadband business), the company expects increased profitability in over-the-top (OTT) video, “as shown by recent price increases, lower content costs and adjustments to promotions,” it said. But it said: “This will likely result in negative net adds” at its DirecTV Now OTT subscription streaming service in the fourth quarter of 2018 and in 2019.