M+E Connections

It is still early, but AT&T is seeing promising signs from the national launch of the Android TV-based AT&T TV streaming service March 2, according to John Stankey, president and COO of AT&T and CEO of its WarnerMedia division.

“One day does not make a quarter,” he conceded March 3 at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco. However, he told attendees: “We had a good day. We’re really pleased with what we saw.”

The company had hoped it would be able to “replicate how customers were receiving the product” in the initial 13 test markets the service was offered in, he said. “And we’re really pleased with what we saw yesterday because it tracked exactly” in line with what the company expected to see, “where we’re getting higher attach rates than what we would traditionally get in selling broadband with satellite,” he said.

AT&T “saw higher growth rates than what we would typically see, and I think that’s driven by the fact that the product is an updated, more feature-rich product,” he told attendees. “Of course, the fact that we can now bundle it more attractively in certain areas, such as” areas where the company has a “fiber footprint, and offer very, very attractive bundles on it,” is allowing customers to become aware of that and they are now “interested to try and kick the tires on it,” he said.

Back in July 2015, after AT&T closed on its purchase of the DirecTV satellite TV service, the company said it “didn’t see satellite delivery as necessarily a growth vehicle for entertainment moving forward,” he recalled. Although DirecTV had an customer base it thought was “attractive… we felt like the march needed to be to delivering entertainment over software and, shortly after that period of time, we made it clear that we would be developing a software platform that would ultimately, not only take our satellite base and offer them a more updated product, but be the replacement for” the AT&T U-verse triple-play telecom service and “give them the next generation of software-driven TV,” he said.

The DirecTV Now streaming service, whose name was changed to AT&T TV Now, represented the “first iteration of that software base, and AT&T TV is that same software base — now fine-tuned for a more robust, full in-home experience that’s available on AT&T-provided hardware,” he noted.

The company’s software products are now “our lead products,” he said. However, the company will continue to offer the DirecTV satellite TV service “where it has a rightful place in the market — places where cable broadband is not prevalent, oftentimes more rural or less dense suburban areas,” he told attendees. “We’ll continue to offer it for customers on a stand-alone basis… but, in terms of our marketing muscle and our momentum in the market, it will be about software-driven pay TV packages,” he said.

WarnerMedia, meanwhile, continues to prepare for the May launch of its HBO Max streaming service, he went on to say. However, the company still has work to do, he conceded. “We just put our second beta out within the controlled beta group that we have,” he said, adding “some new features came out on that — some important features that build on the base of the first beta,” including the profiling of customers and content download. It is “good to see those features starting to manifest themselves,” although they “still need a little bit of work,” he said. The team, however, “has a work plan to get that buttoned up and ready to go,” he told attendees.

The company’s technology team “has confidence about what they’ve committed to deliver in May,” he added.

The company recently announced a new carriage agreement with Google’s YouTube TV over-the-top service. “YouTube TV now has incentives to go and put HBO out there, and they will be an HBO Max distributor at launch,” Stankey pointed out, adding that will help “move customers into HBO Max when it’s in the market.” It also “allows us to get good momentum in combination with the 10 million AT&T subscribers,” he said.

Stankey was “pretty confident sitting here today you will see other distributors at time of launch that will have that path to migrate their customers into Max that will give us good customer growth on day one,” he added.