AT&T’s new streaming service will arrive with three tiers in place designed to accommodate different users as well as competing at different price points. This update comes directly from AT&T as part of a guidance for 2019 update released today.
AT&T has now confirmed the different tiers for its new streaming service will focus in on different selling points. For example, what AT&T refers to as the “entry-level” option will come with an emphasis on movies and presumably at a low monthly cost. The second tier will be marketed as a “premium” level which not only includes original programming but also “blockbuster movies.” This compares to the the third (top) tier package which will effectively offer the same content provided by the two lower tiered options, as well as access to “extensive library of WarnerMedia and licensed content.” In addition to providing these details, AT&T also reconfirmed the direct-to-consumer streaming service is on schedule to arrive late in 2019, during the fourth quarter and as a beta release.
Background: For weeks now it has been clear AT&T plans to launch a new streaming service in 2019 after various executives confirmed as much through public statements. It has also been clear that this service would come with a heavier focus on HBO content following the acquisition of HBO by AT&T as part of the much larger acquisition of Time Warner. After the deal went through, AT&T quickly launched a new WarnerMedia entity and it’s understood this new streaming service would focus on WarnerMedia content specifically, including using HBO as one of the main selling points to attract new users. This is something that was once again reiterated in this latest announcement with AT&T stating the new service will be used to “complement WarnerMedia's existing business.” The same statement also goes on to point out that in addition to exposing WarnerMedia content to new customers, it will also act as a data collection tool that allows the company to “provide data and analytics to inform new products and better monetize content.”
AT&T is not new to the streaming market as although it is one of the leading forces in traditional TV thanks to its DIRECTV service, it also offers a cord-free option in the form of DIRECTV NOW that offers much of the same content but without the need for any additional hardware or long-term commitments. Even more recently, AT&T launched another streaming service that looks to accommodate budget users by offering a streaming package priced at just $15 per month for access to a limited number of channels and content. Also, AT&T has started making moves in the streaming hardware market and is set to release a new streaming box that although will in principle be powered by Android TV, it will come with much more of a focus on a DIRECTV NOW-infused interface. This will offer consumers a dedicated option for the company’s main streaming service and is likely to be targeted at the company’s existing DIRECTV customers who have yet to migrate to a cord-cutting lifestyle. While also acting as a cost-cutting measure for AT&T who can tie users into its streaming service (instead of losing them to competing streaming services) without having to account for the costs involved with having technicians come out to install and set up units - this will be a self-install device much like many of the other off-the-shelf solutions available today.
Impact: Providing nothing changes in relation to the existing options offered by AT&T, it would seem when the WarnerMedia-driven streaming service arrives, AT&T will have largely cemented its position within the streaming market. And this will not have been by accident as the level of options and choices offered by the company clearly represent an aggressive push by AT&T to ensure it is at the forefront of the streaming movement ahead of when it finally tips over the boundary and becomes the main way in which people consume video. Something that all indications and predictions now point to with the number of people who have ‘cut the cord’ not only increasingly, but at a rapid rate, and that rate expected to continue to rapidly increase throughout 2019. Even today, that number is already of significant value with reports earlier in the year predicting by the end of 2018 there would be in excess of 33 million cord-cutters in the US alone.
From the user perspective, the employing of different tiers is certainly going to be a positive as it will mean consumers are given even greater choice when it comes to finding the right package that not only suits their individual viewing habits, but also their budget. Although it still remains unclear as to where the difference between these tiers lie and how much value each tier will genuinely offer or whether lower tiers will simply be designed as stepping stones to encourage users to upgrade to the tier above. For example, even AT&T’s own words seem to suggest that the entry-level option really will be entry-level and especially if the movies offered at this price point are not blockbuster-worthy. Considering that is one of the aspects AT&T has used today to distinguish between the entry and premium level access points.
Of course, it also remains to be seen how entry-level the pricing will be and this is likely to be the most crucial element which is likely why AT&T has yet to clarify pricing. Considering AT&T already offers a service that’s priced at $15 per month it would seem unlikely the company plans to position the affordable plan for this service in direct competition with that other budget service. With that $15 service priced as low as it is, it therefore would seem most likely the entry-level pricing for the WarnerMedia service will be higher. If that’s the case, and a higher price still results in limited content compared to what else is available at a similar price point, the entry-level tier may struggle to attract many users. If lower than WatchTV's $15 per month, then the entry-level tier would find it facing even stiffer competition considering it will then be in a direct battle with the likes of Netflix and Hulu.