Late last week a report emerged that provided more details on the upcoming WarnerMedia service from AT&T’s perspective. This included the suggestion DIRECTV NOW and the new WarnerMedia service might be merged together.
However, things are not as straightforward as that.
First off, the report combined two different sources of information. On the one hand there were details provided by WarnerMedia’s CEO, John Stankey, and the other snippets of information were provided by “people familiar with the matter.”
The details on the possible merging of the two services came from the latter.
The first point to not here is this is not confirmed information, nor is it even information that has come in an official capacity, unlike the details there were provided by Stankey in the same report. Therefore, it is important to take into consideration the strength of the suggestion.
Even if the comments had come from Stankey, that also would not necessary guarantee them to be accurate – just accurate at the time.
For example, it now seems clear that WarnerMedia is planning to launch with a single price tier in place. Technically, two as the company is expected to launch an ad-supported version at a later date. However, at launch the understanding is one price to access the service.
This contradicts an AT&T confirmation from November of last year that indicated the service would arrive with three pricing tiers in place, including an entry level option.
The suggestion was users could choose from the three price plans and gain access to more or less content depending on the price choice.
The reason for the discrepancy between one and three plans is AT&T is continuously feeling the market out – sending out signals and seeing how the market responds. In this sense, almost nothing is set in stone with AT&T until it is officially launched.
This is the same with any DIRECTV NOW and WarnerMedia merger. AT&T might indeed decide to merge the two, but then again it might not. Right now, that is less of a priority for the company as getting the WarnerMedia service up and running and subscribers on board.
There has also been suggestions that AT&T is “open” to merging its traditional DIRECTV business with Dish Network’s Dish TV. Again, just like the DIRECTV NOW and WarnerMedia merger, there’s nothing official here just people ‘in the know’ pointing to the possibility.
Even if AT&T did decide to merge DIRECTV NOW with the WarnerMedia service as suggested, that might not necessarily be in the way that the headline suggests.
What the “people” actually were noted saying was AT&T wants to offer “a combined product with a common search and user interface.”
This seems like a very natural thing for AT&T to do.
Right now, the general consensus is the WarnerMedia service will primarily focus on combining HBO, Cinemax and Warner Bros. content into one package. That’s not to say those same customers will have access to all of AT&T’s live TV channels – all of what’s available through DIRECTV NOW.
While there will be some overlap, the two products are not the same and they will differ in many respects. For example, the WarnerMedia service is likely to arrive at $17 per month while the current cheapest DIRECTV NOW plan is $50 per month. They will be very different products aimed at very different markets.
Therefore having a way in which customers can access both packages through a unified “search and user interface” makes total sense.
This is even more true when you consider AT&T has spend a good amount of time developing a dedicated DIRECTV set-top box that is almost purpose-designed to lock users into the DIRECTV experience and packages.
It makes total sense that the set-top box would also allow users to access the content available through the WarnerMedia service as well – AT&T will want to make its different products as easily accessible to all of its video customers.
From this perspective, the suggestion the DIRECTV NOW and WarnerMedia user experiences may merge seems like a given. They will under the right circumstances and especially when using the company’s own hardware solution. But that does not necessarily mean the two services will merge in the traditional sense.
What makes the landscape all the more confusing is this set-top box appears to be mainly aimed at traditional DIRECTV (not “NOW”) customers. It is, in effect, the streaming alternative for those customers and its existence is probably why there’s rumors the traditional setup for the business (infrastructure and so on) might merge with Dish TV as AT&T looks to move completely to a streaming-only video setup.
If that is the case and DIRECTV becomes a streaming solution that’s primarily focused on live TV streaming through a dedicated set-top box that also offers access to WarnerMedia content, then the most likely outcome for DIRECTV NOW is that it is abandoned altogether. It will be surplus to requirements in AT&T’s eyes – as will its DIRECTV NOW customers.
Based on all of these snippets of information, and the various directions AT&T could move in, what is the most likely scenario is that at least one DIRECTV-based product (possible rebranded as this point) and the new WarnerMedia service will be offered to consumers as a merged product for those who want both services. Again, that's not saying the products will be merged, but they will additionally be sold as a merged product and you only have to look at Hulu to see this approach in action.
Hulu has its standard on-demand service which consumers can subscribe to for $11.99 per month or $5.99 per month with ads. Hulu also has its “+ Live TV” product which provides access to live TV.
Hulu with live TV costs a minimum of $44.99 per month and comes bundled with the standard Hulu package. The two have been merged as they are technically different products and you can subscribe to just the Hulu on-demand product if that's all you want, but you can also buy them both as a combined product if you want.
In fact, maybe that has been AT&T’s underlying plan all along? Maybe AT&T does indeed plan to launch three pricing tiers for WarnerMedia.
An entry-level option that’s ad-supported, a standard plan for $17 per month and a bundle that also includes DIRECTV live TV access for a premium price.