DirecTVAT&T CEO Randall Stephenson revealed a bit more about a developing AT&T video transition strategy on this week’s quarterly earnings call, including providing some additional details about the “very thin hardware client” that he first mentioned back in September.

At that time, Stephenson said the company would aim to transition its traditional Directv linear video offering delivered over satellite to instead be delivered over a broadband connection using the same platform that supports the company’s over-the-top DIRECTV NOW (DTVN) mobile-centric video offering. That DTVN platform is evolving, and AT&T outlined some enhancements that are coming, including cloud DVR and a third concurrent stream (DTVN now supports two concurrent streams).

Also on this week’s call, however, AT&T Senior Executive Vice President and CFO John Stephens noted that the company will continue to rely on satellite video delivery for rural areas for the foreseeable future. He did not detail the reasons behind this, but the likely explanation is that some rural areas are less likely to have quality broadband at high enough speeds to support video streams, particularly multiple video streams, while also supporting email, social media, telecommuting and other applications.

AT&T Video Transition Strategy
The Seeking Alpha transcript of AT&T’s earnings call this week quotes Stephenson about the company’s plans for a OTT video transition.

“[B]efore year end, we plan to launch the next-gen product in a home-centric configuration with a very thin hardware client,” said Stephenson. He described the thin hardware client in a way that sounded very much like a Roku, Amazon or Apple streaming media player. “It’s a very small inexpensive streaming device plugged into your TV and then you connect it to any broadband service,” he said.

The DTVN offering already is available on traditional TVs through apps hosted on third party devices like AppleTV, Roku, or Amazon Fire devices, but was also designed to be mobile-centric. And as Stephenson explained back in September, the new device also will have capabilities not possible through third-party streaming devices today.

This week he outlined some additional capabilities of the upcoming device, which he said will have a voice-controlled user interface with an integrated search feature and will allow customers to search across any streaming video service to which they subscribe – including DTVN, Netflix, Amazon, Hulu and YouTube.

The shift to the thin client device also will improve the economics of AT&T’s traditional offering, Stephenson said.

Shifting to the device, he said, will “drive the cost structure of the traditional video product down so that you could preserve margins in the traditional linear video as you grow in the over-the-top applications and video services.”

Stephenson and his team stressed that AT&T is quite adept at managing transitions like what is currently happening to the pay-TV model. They cited the transition from home phone service to mobile as one example that AT&T managed well. As a result, Stephenson said he is “bullish” about the overall video business, despite the heavy subscriber losses AT&T and other providers are seeing with traditional pay-TV. AT&T reported about 1.2 million DTVN subscribers, as of the end of 2017.

Bernie Arnason contributed to this post.