directv now logoAT&T today took the wraps off its eagerly awaited AT&T OTT services, featuring DIRECTV NOW – and there’s a lot to sort through. There will be three AT&T OTT video offerings available on Wednesday November 30th, one of which, DIRECTV NOW, has four different tiers.

Accompanying the launch will be several cross-marketing promotions involving the company’s own wireless service and several device manufacturers. Also announced were a couple of original content channels involving Taylor Swift and Reese Witherspoon.

“There’s over 20 million households that are not part of the pay-TV ecosystem today,” said John Stankey, CEO of AT&T Entertainment Group at a press conference in New York today. “This product is tuned to address portions of that base.”

AT&T directv now launch
AT&T Entertainment Group CEO John Stankey

AT&T first talked about plans for an OTT offering that could be streamed to wired or wireless devices nearly a year ago, subsequently offering additional details along the way.

As anticipated, AT&T’s OTT video offerings do not require the purchase of a traditional pay TV service, and will be available to anyone with a broadband connection (wired or wireless) nationwide. Also as anticipated, AT&T wireless customers can stream these AT&T OTT offers without them counting against their monthly data allowance.

What AT&T will charge for its flagship DIRECTV NOW video offering also is as anticipated (or pretty much as anticipated), despite red flags waved by one financial analyst last month. According to today’s press release, AT&T will offer a limited time promotional price of $35 for 100 channels – a price that, according to Moffett Nathanson estimates will yield the carrier just $1 of gross margin per month.

Yet despite the limited time nature of the offer, AT&T said customers who sign up for it during this promotional period will “continue to enjoy this special price for as long as you keep the package, subject only to future reasonable programming price increases applicable to all packages.” The 100 channel package will normally sell for $60/month.

AT&T addressed these margin challenging issues during their press conference today, citing their ability to generate premium dollars for advertising, through addressable, targeted advertising on their AT&T AdWorks platform.

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AT&T Entertainment Group EVP Brad Bentley

“It’s already a $2 billion dollar business when you add all of our advertising,” said Brad Bentley, EVP of marketing for AT&T’s Entertainment Group. “This is how we’re going to keep our pricing down, is creating innovative, data driven ad placement across our streaming products.”

AT&T OTT Offerings
Here’s the rundown on what AT&T announced today.

  • DIRECTV NOW includes programming packages “seeded from our existing satellite TV service,” AT&T said in a press release about the new AT&T streaming video offerings. The company offered some catchy names for four different service tiers, including:
    -Live a Little- $35/month (60+ channels)
    -Just Right- $50/month (80+ channels)
    -Go Big- $60/ month (100+ channels)
    -Gotta Have It- $70/ month (120+ channels)
    Customers can add HBO and Cinemax for an additional $5 each per month.
  • Fullscreen, which actually launched in late April,  will cost $5.99 monthly, an increase of $1 from its launch price. AT&T notes, though, that the service now offers more than 1,500 hours of ad-free premium original series, TV shows and films. Fullscreen is majority owned by Otter Media, a partnership between AT&T and The Chernin Group.
  • FreeVIEW is an ad-supported video service that has a “sampling” of on-demand content from AUDIENCE Network, Otter Media properties and DIRECTV Now channels.

AT&T didn’t offer full details regarding the content that will be available via DIRECTV NOW at today’s press conference. The usual suspects are present, including CNN, ESPN, USA, Comedy Central, A&E, etc. Noticeably missing is CBS and Showtime, although AT&T says they are working on those negotiations. VoD content will also be available

Local channels are a bit sketchy. AT&T does have rights for broadcaster owned local networks in some cities. But affiliates aren’t currently available, meaning local channels will be missing for now for large parts of the country. Broadcast TV shows and content will be made available, with some restrictions, through VoD though.

directv now channel line-up
AT&T DIRECTV NOW Channel Line-up (Source AT&T)

There will be no 4K TV content for now. Subscribers will be limited to two simultaneous streams. There will also be content restrictions, especially with sports. For example, Verizon has exclusive rights for NFL games on mobile, so DIRECTV NOW can stream NFL games from their relationships with Fox and NBC, but just not to mobile devices. DIRECTV’s venerable NFL Sunday Ticket package is also not available on DIRECTV NOW.

A DVR feature is not available at launch either, although AT&T says that feature may be coming in 2017.

Original Content
AT&T will feature its already launched original content through the AT&T Audience Network. Additionally, they announced two new original content initiatives featuring Taylor Swift and Reese Witherspoon:

  • The Taylor Swift NOW channel will launch soon, will focus on the pop star and will be available only to people who subscribe to one of AT&T’s video services, which can include DIRECTV, DIRECTV NOW and U-verse.
  • Hello Sunshine from actress Reese Witherspoon and Otter Media is an ad-supported video-on- demand channel that will launch in 2017 exclusively on DIRECTV and DIRECTV NOW. It will focus on “female-driven” stories including acquired movies and TV series as well as made-for-digital content.

AT&T OTT Devices
These AT&T OTT offers will be made available on a variety of devices and AT&T has developed some bundled packages with devices. All of these offerings, including DIRECTV NOW have a mobile first orientation, meaning they have built the platforms to work best on mobile, so iOS and Android apps are front and center.

But they will also work on connected TVs and STBs. Roku is not supported yet, but is expected sometime in 2017. The current range of supported devices includes:

  • Amazon Fire TV and Fire TV Stick
  • Android mobile devices and tablets
  • iPhone, iPad and Apple TV
  • Chromecast (Android at launch; iOS in 2017)
  • Google Cast-enabled LeEco ecotvs and VIZIO SmartCast Displays
  • Internet Explorer, Chrome and Safari web browser

Customers can get a free Apple TV STB by prepaying for 3 months of DIRECTV NOW, or a free Amazon Fire TV Stick for one month pre-pay. Additional bundled offers are available with LeEco connected TVs and Lenovo laptops.

AT&T is entering a crowded OTT space, with Sling TV (who coincidentally announced a beta cloud DVR service today), Sony Playstation Vue, and a soon to launch service from Hulu. These OTT platforms are testing the limits of pay-TV and in the case of Sling/DISH and AT&T, playing a somewhat interesting game of chicken, by offering an OTT service that could potentially cannibalize their traditional pay-TV service.

AT&T is clearly trying to limit cannibalization of its premium DBS based DIRECTV by DIRECTV NOW by taking a mobile first approach and limiting content availability (no 4k and no NFL Sunday Ticket for example). We will soon find out if that strategy works.

Bernie Arnason contributed to this post.

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