AT&T is trying a new approach toward the over-the-top video opportunity, announcing today that it has created a joint venture with media company The Chernin Group to focus on OTT video. The companies said they would jointly invest $500 million in the venture with the goal of “investing in advertising and subscription VOD channels as well as streaming services.”
OTT is both an opportunity for and a threat to the nation’s largest pay TV providers – including AT&T, Verizon and cable companies such as Comcast and Time Warner Cable. OTT video offerings such as Netflix and Amazon Prime threaten the pay TV providers’ subscription and VOD revenues. But Netflix and Amazon Prime don’t have their own networks – and those networks could become increasingly important as TV Everywhere gains in popularity, giving consumers the ability to watch video on a variety of devices. And as that happens, companies such as AT&T and Verizon that have mobile as well as landline broadband networks may have an edge.
Based on today’s press release announcing the AT&T/ Chernin Group venture, the venture partners appear set on capitalizing on that edge.
“Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles and connected TVs on mobile and broadband networks,” said The Chernin Group Chairman and CEO Peter Chernin in the release. “AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”
This isn’t the first time a major telco has created a joint venture aimed at developing video offerings that would leverage mobile as well as broadband offerings. Developing such offerings was a goal of the joint venture that Verizon created with several of the nation’s largest cable companies a couple of years ago, but that venture yielded no new service offerings and is no longer an element of Verizon’s or the cable companies’ OTT strategies.
Currently Verizon offers OTT video streaming through a partnership with Coinstar, owner of the Redbox DVD rental business – and the ability to view content on mobile devices is an element of the Verizon/Redbox streaming offering.
According to today’s press release, privately-held The Chernin Group (TCG) has built, managed, operated and invested in businesses in the media, entertainment and technology sectors around the world since 2010. Chernin himself sits on the boards of streaming music service Pandora and social media company Twitter, and TCG has investments in a range of digital media companies including Tumblr, which has been acquired by Yahoo, and Pandora.
“The Chernin Group’s management and expertise in content, distribution and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space,” said AT&T Chief Strategy Officer John Stankey in today’s release.