AT&T today announced new video offers under the DirecTV brand which will be available in the fourth quarter. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan may also be reached via email or phone at jan@jackdawresearch.com or 408 744 6244.
These new offers demonstrate that AT&T is serious about leveraging its DirecTV assets. This is both a defensive strategy against cord cutting and cord thinning and an offensive strategy to grow its addressable market. The DirecTV Now offering is the most compelling, as it has the potential to be the first true pay TV replacement offered on non traditional devices. Offerings from Sling, Sony, and others have offered only partial alternatives which have each had serious shortcomings. While we don’t know exactly what the DirecTV Now bundle will look like, it sounds like the main difference versus traditional offerings will be the lack of multiple room support, which likely won’t be an issue for most of the potential market for the service.
The other two offerings are probably best seen as sales and marketing channels for DirecTV Now. DirecTV Mobile harkens back to an earlier era of mobile specific content offerings, and seems a poor fit for this generation’s cross-platform content services. As such, it may be a decent fit for a few entirely smartphone centric customers, but will otherwise be unsatisfying for customers who want to watch video on other devices regularly.
However, seen in the context of mobile video strategies from other US wireless carriers, DirecTV Mobile looks a lot more compelling, and is the first mobile video strategy from a US carrier that seems likely to make video pay. BingeOn’s main virtue is as a customer acquisition strategy for wireless services, while Verizon’s Go90 remains one of the more baffling services launched into this space and seems destined to remain marginal in the overall market.
Overall, the new offerings leverage DirecTV’s assets, especially its content relationships and its brand, very effectively. Coupled with a bundling strategy across the AT&T family, they should drive better customer acquisition in both video and mobile as well as protecting and growing video revenue. The biggest risk is cannibalization of existing pay TV offerings under both the AT&T and DirecTV brands.