The shift from traditional pay-TV to online streaming is overwhelming telecoms industry efforts to invigorate sales by bundling services.
AT&T, for one, has been bundling services since acquiring DirectTV in July 2015 — combining pay-TV and mobile phone services to try to ease the damage being done by phone price wars.
Timeline for Comment wire
- March 18, 2019
- March 15, 2019
On top of this, many of its customers have been jumping ship for the likes of Sprint and T-Mobile.
But AT&T is trying to make bundling work while the traditional pay-TV market is also being turned on its head.
The numbers of so-called cord-cutters — those ditching pay-TV subscriptions for online streaming — are swelling, while the new generation of cord-nevers — people who have never paid for traditional TV and never will — are fast catching up.
Even people who subscribe to a pay-TV service are watching it less, as online alternatives such as Netflix and Hulu suck up screen time.
AT&T lost around 400,000 DirectTV customers in the third quarter of this year, though on a more positive note it added some 300,000 subscribers to its highly discounted DirectTV Now streaming service over the period, reaching 780,000 subscribers in less than a year.
This trade off — while allowing AT&T to compete with online rivals — is not good for its bottom line, with DirectTV Now subs far cheaper than the cable version.
Meanwhile, AT&T’s pending $85bn acquisition of Time Warner Studios is a big gamble.
AT&T says acquiring Time Warner will help it charge less for video content because it will be able to use targeted advertising based on online customer data.
It should be noted that AT&T is not making its plans in a vacuum, as rivals are getting in on the bundle and video-content game.
Verizon is aiming to launch a new online TV service to challenge DirectTV Now during the first half of next year.
3 Things That Will Change the World Today
Unlike AT&T, Verizon does not intend to own the video content it will deliver, but will set up licensing pacts with content providers.
T-Mobile, meanwhile, has set up an exclusive partnership with Netflix — bundling a subscription to the biggest online streaming service in with its mobile packages.
Cable operators, never ones to miss out on the action, are getting stuck in — adding wireless options to their packages.
Comcast’s Xfinity Mobile has racked up more than 250,000 subscribers since its May launch. Meanwhile, recognising the threat posed by online streaming, Comcast has integrated Netflix and YouTube into the set-top box for its cable TV services.
All of the traditional players need to remember this is a very young market — it can and will change quickly and being able to adjust quickly will be important as cord-cutting expands.
Free download worth over $5000Download our 2018 Technology, Media and Telecoms Predictions Report
In this report, we look at the 30 big tech themes for 2019, identifying winners and losers for each theme. This report will impact all industries helping:
- CEOs/Senior Staff: in all industries understand the disruptive threats to their competitive landscape
- Investors: Helps fund managers focus their time on the most interesting investment opportunities in global TM