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June 12, 2019

AT&T’s rumoured strategy shift reflects the evolution in streaming services

By GlobalData Technology

Rumours circulating about AT&T’s shifting plans for its WarnerMedia streaming service highlight the fact that growing competition and evolving market dynamics in over-the-top video services will force all competitors to be nimble.

WarnerMedia tinkers with streaming services

AT&T is reportedly planning to offer a single streaming bundle that will include content from WarnerMedia properties HBO, Cinemax and Warner Bros. for a monthly price in the $16-$17 range. If true, this would be a significant change from plans AT&T enumerated over the past six months.
WarnerMedia will reportedly offer this new streaming service in beta later this year, with an eye toward an official first quarter 2020 launch.

AT&T acquired Time Warner a year ago and began moving quickly to leverage the entertainment properties it gained.

In November, the company expounded on its vision for a WarnerMedia streaming service with three tiers – an entry tier focused on movies; a premium tier offering original programming and blockbusters and a third fully loaded level combining content from the first two tiers plus a library of WarnerMedia content and other licensed content.

The company subsequently revealed plans to make its higher-end services commercial free and supported by subscriptions while lower-cost entry-level services would be ad-supported.

Reports of a revised strategy indicate AT&T is being buffeted by the changing conditions of an increasingly crowded streaming video market, meaning there could be even more changes in store for its planned service before it finally hits the mass market.

One looming threat is the planned 12 November launch of Disney+ at a bargain basement price of $6.99 per month or $69.99 per year. In comparison, video streaming leader Netflix’s subscription plans start at $8.99 per month, and it will soon be losing Disney content that will be shifted over to Disney’s own streaming service.

Disney expects to sign up 60 million to 90 million subscribers to Disney+ by the end of its 2024 fiscal year, with two-thirds of those customers coming from outside the US.

Furthermore, Disney is now effectively in total control of Hulu, after agreeing in May to buyout Comcast’s 33% stake via a complicated put-call agreement that will extend over several years. That positions the House of Mouse to bundle its various streaming services – Hulu, ESPN+ and Disney+ – into compellingly priced packages.

Meanwhile, Comcast will also be diving into the mass-market over-the-top pool with its planned NBC streaming service, slated to launch in spring 2020. Another notable streaming rival, Apple TV+, will also launch this fall in the form of an original video subscription service.

The already crowded market for streaming video remains a work in progress. Expect to see business models and price plans undergo more disruption as new arrivals battle for market share.