hbo goThere is an ongoing debate about the true impact of video cord cutting. One side of the argument says consumers are actively cutting the cord to save money or because they consume video differently than the traditional ‘smorgasbord’ channel line-up model. The counter argument points to the data and says cord cutting is simply not a major concern. The debate is not stopping service providers from experimenting though, with AT&T’s latest broadband and HBO bundle as an example.

AT&T is offering a bundle of 18 Mbps broadband, a very limited local channel line-up, and a HBO subscription, which almost looks like an HBO a la carte option. The bundle is priced at $40 per month and includes Wi-Fi service (in and out of the home) as well as U-verse DVR service. AT&T is also highlighting the TV Everywhere aspect of the offer, which allows subscribers to watch the HBO GO app on the go.

It’s a 12-month promotional price with a hefty $180 early termination fee and also includes a $99 installation fee. Subscribers can opt for a faster 45 Mbps broadband tier and add HD capacity for additional monthly fees. The promo expires July 5, 2014.

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With this option, AT&T hopes to attract broadband subscribers who are not interested in full blown channel line-ups, but do want HBO and a DVR. Subscribers can then augment their content choices with OTT options from Netflix, Hulu, Amazon, and others. AT&T gets to place a STB in the home and entice these subscribers to use their VOD and other revenue generating services, perhaps as an alternative to Netflix.

The move reflects the need to experiment with channel line-ups and other bundled services to meet the differing needs and expectations of customers. While cord cutting is not a hugely painful trend today, no one can argue that consumer preferences for video and broadband are evolving quickly. There is a segment of consumers who want broadband and limited video options, and will supplement their video needs through broadband delivered content.

Will a $40 price point attract this segment?

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