The future of AT&T lies in video. OK, in business and mobility and all the other stuff we traditionally know AT&T for. But in buying Time Warner and in turn creating WarnerMedia, AT&T has invested heavily not just in delivering content, but also in creating it.
With the purchase of Time Warner AT&T acquired such brands as HBO, Warner Bros. and Turner. Who wouldn't want to own dragons, right? And certainly those brands aren't going anywhere. But what AT&T needed was some other way to distribute them. Selling the rights to traditional providers — cable companies, Netflix, other over-the-top providers like Sling TV and PlayStation Vue and YouTube TV — that's fine, and it'll continue. But AT&T thinks bigger.
Better is to have your own service. AT&T already has DirecTV Now for live showings, and it's a great way to play off its mobility business, with discounts for its wireless customers. But that's still the same as a Netflix-like business. And it's not just about Netflix-like revenue — AT&T's also after the Netflix-like data, which it can use with its new Xandr advertising services.
See, it's not just about selling phones. And selling service. And selling streaming video And selling streaming video you can watch on those phones. And creating that video in the first place. It's also about leveraging the data gleaned from all of those tentacles.
Here's how Xandr, born from AT&T's own ad business and the acquisition of AppNexus, is described:
With Xandr Media's Addressable technology, target and serve more relevant ads directly to the right audiences across the largest national addressable footprint. Addressable Video delivers your message to your desired audience – and only that audience – regardless of programming or time of day in both live and playback modes.
Powered by AT&T's first-party data, we combine set-top box data with anonymized subscriber data to create relevant consumer segments. Unlock powerful insights that can then be used to optimize future campaigns with post-campaign measurement and reporting that includes closed-loop attribution and advanced analytics.
So when you're wondering why AT&T (and WarnerMedia) is doing all this, there's your answer. It's all about targeting. The targeting of services to consumers in ways they want — that's where the less expensive "skinny bundles" like the new WatchAT&T come in. And it's also about the more direct targeting for advertisers, so they reach the people they want — and don't pay for the folks they don't.
That's where WarnerMedia's as-yet-unnamed Netflix competitor comes in.
We're not going to see WarnerMedia's big "direct-to-consumer" offering until the fourth quarter of 2019. But at an analyst event in late November 2018, we're starting to see how things will take shape.
"It's gotta be easily accessible," WarnerMedia CEO John Stankey said during the analyst event. "It's gotta ubiquitous, over all devices. Anywhere the customer wants to go. It will be a combination of original content that's unique and special, that gives it character."
WarnerMedia's new service — we'll call it ATTFlix until it gets an official (and likely much worse) name — will have three tiers of service. They'll break down thusly:
- Entry service: Will be focused on movies. Don't want more than that? You don't have to pay more than that.
- Premium service: In addition to movies — and "blockbuster movies," at that — there also will be "premium and original programming."
- Bundle service: Takes those two bottom tiers and adds Classics, Kids & Family, Theatrical, Comedy, and Niche/Genre.
We don't have prices on any of that, of course. ("A very affordable price point," Stankey said of the entry-level tier.) But it's something that nobody this side of Netflix and Amazon has put together — and even then it's a very different business than Netflix or Amazon. It's bigger. (Much bigger, actually, when you consider AT&T as a whole.) And Stankey was not shy about wanting to get customers into that third tier of content.
For now, though, we wait. AT&T still has DirecTV Now for the streamers. And DirecTV Now for the satellite crowd. And WatchTV for the skinny bundle. This time next year, though? Things will look very different.
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