Posts for 'AT&T'

Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

AT&T is spinning off WarnerMedia, closing a chapter on its ill-advised media foray that cost the company billions of dollars. VideoNuze readers know that I thought the acquisition of Time Warner did not make sense from the beginning as any hoped-for benefits were illusory and it was based on a backward-looking approach that distribution and content belong together. As this became more evident, AT&T, groaning under a mountain of debt and faced with heavy upcoming investments in 5G and streaming to stay competitive, decided on a U-turn in strategy.

In today’s podcast Colin and I dig deeper into all of this and also consider the prospects for Discovery-WarnerMedia. We both believe it makes a lot more sense than AT&T-WarnerMedia but we’re curious how broad the appeal will be for a bundle of HBO Max and discovery+ which is the most likely route for the deal to work out. The devil is always in the details for whether these big deals actually pay off, and interestingly, once again, company executives were vague about the specifics.

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AT&T is spinning off WarnerMedia to Discovery, just 4 1/2 years since it announced it was acquiring Time Warner (as WarnerMedia was then known) and just three years since the deal actually closed, following exhaustive regulatory challenges and litigation. For AT&T, the U-turn in strategy is a tacit admission that it didn’t realize the benefits it touted as the rationale for the deal.

That’s no surprise because, as I said at the time, the benefits were illusory and were completely out of synch with realities that broadband, streaming and connected TV were driving. The press release announcing the Time Warner acquisition was filled with corporate gobbledygook such as “The future of video is mobile and the future of mobile is video” and “Combined company positioned to create new customer choices - from content creation and distribution to a mobile-first experience that’s personal and social.”

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Welcome to the 544th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Kids movies were a big part of the success of Disney+ in 2020, with the service having seven of the top 10 streaming movies, according to Nielsen. But as Colin and I discuss, Disney+ will be challenged this year by Netflix, HBO Max and others. With theaters still running at low capacity due to Covid, 2021 is setting up as a game-changing year for streaming movies.

Separate, this week AT&T pulled the plug on its AT&T TV Now virtual pay-TV service, which at one point a couple years ago led the category with nearly 2 million subscribers (when it was called DirecTV Now). Colin and I examine what went wrong and why AT&T shifted its strategy so dramatically.  

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It’s too soon to know whether 2019 will be remembered as the turning point year for the pay-TV industry - when all of the negative trends coalesced into a perfect storm that permanently diminished the industry’s place in American homes. But I’d say the odds are likely that 10-20 years from now, 2019 will likely be the top candidate for “turning point year.”

For evidence, consider new data from Leichtman Research Group, finding that major pay-TV providers which account for 95% of the market, lost 4.9 million subscribers in 2019. If 100% of providers had been counted, the losses would have been 5 million or more.

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Not that long ago, regional sports networks (RSNs) were the beachfront property of the pay-TV industry. RSNs had exclusive rights to air local sports teams’ games in their markets and rabid fans willing to pay virtually any price to watch (especially if the local team was having a winning season). But the icing on the cake was that even non-fans were often paying for pricey RSNs, because their fees cleverly became inseparable from the most popular TV packages. In short, RSNs practically had a license to print money.

But few things last forever, and RSNs have become the latest example of the Internet’s disruption. Yesterday, the NY Post reported that AT&T’s auction of four of its RSNs, in Denver, Houston, Pittsburgh and Seattle, has drawn meager interest. AT&T was looking to sell the group for around $1 billion, but the bids have come in “around or below $500 million.” A big red flag was the four RSNs’ financial performance - an expected drop in earnings from $115 million in 2019 to just $55 million in 2020.

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I’m pleased to present the 499th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Earlier this week AT&T reported its Q4 ’19 earnings. There was plenty of lousy news, and as Colin and I discuss, at the top of the list was a loss of over 1.1 million pay-TV subscribers in the quarter, compared with 658K subs lost in Q4 ’18. For the full year, AT&T lost 4.1 million, more than 5x the 750K it lost in 2018. The combined 4.8 million subs that AT&T has lost in the past 2 years is nearly 20% of what it started with back on Dec. 31, 2017.

There is arguably no bigger influence on the pay-TV industry’s overall cord-cutting rate than AT&T because of its sheer size and outlier loss level. All of that - and lots of other factors - lead us to believe that the rate of cord-cutting is actually going to accelerate in 2020. Colin has crunched the numbers and believes when all the Q4 results are reported, the traditional industry (not including vMVPDs’ gains) will probably lose around 6.5-7 million subs in 2019. He sees that escalating to around 8.5 million in 2020.

We dig deeply into all of this on the podcast. We all have a front row seat to an industry in complete transformation. As it has in countless other industries, we are watching the Internet massively disrupt the pay-TV and TV industries.
 
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AT&T reported its Q4 ’19 earnings this morning and in the “Entertainment Group," it was U-G-L-Y. The top line numbers are mind-boggling: 945K “premium video” subscribers (DirecTV and U-verse) lost and 219K “OTT video” subscribers (DirecTV Now and AT&T TV) lost for a total of 1.164 million lost. In Q4 ’18, AT&T lost 391K premium subs and 267K OTT subs for a total of 658K subs lost. So the Q4 ’19 sub loss was 77% higher than the Q4 ’18 sub loss - although in the category of “cold comfort,” it was 14% lower sequentially vs. Q3 ’19 when AT&T lost 1.36 million combined video subscribers.

But broaden the lens to consider full year 2019 vs. full year 2018 and things look even worse. In 2018 AT&T lost a total of 750K subscribers (a result that was helped enormously by the addition of 654K total DTV Now subscribers in first half of the year, more on that below). In 2019 AT&T lost 4.1 million subscribers or more than five times the prior year.

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I’m pleased to present the 495th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

In today’s podcast, our final one for 2019, Colin and I share our top 10 video stories of the year. Whether you agree or disagree with our top 10 (or the ordering), no doubt we can all agree it’s been quite an eventful year for the industry. But as busy as 2019 has been, 2020 is setting up to be a year of even more innovation and change.

As always, Colin and I have had a ton of fun discussing all of the industry’s happenings each week, and we hope you enjoyed following along throughout the year.

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Just before the WarnerMedia team took the stage to unveil details of HBO Max, Sony announced that would it shut down its 4 year old PlayStation Vue virtual pay-TV service on January 30th. The moves are 2 great examples of the constantly-shifting strategies of big media companies.

PS Vue was an early mover in virtual pay-TV (or “vMVPD”). But if you think of the industry in 4 quadrant terms, with price on one axis and channel lineup on the other, PS Vue was relatively high on both - it offered a mostly complete channel lineup competitive with traditional pay-TV operators, but not at a significantly reduced price (which is the top motivator for prospects).

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AT&T is moving further away from the low-cost virtual MVPD (“skinny bundle”) model it helped pioneer with DirecTV Now back when it launched in 2016. Per multiple reports on Friday, AT&T will increase the monthly price of its “Plus” tier by $15 (to $65 per month) and its “Max” tier by $10 (to $80 per month) in November.

This past summer AT&T rebranded DirecTV Now as AT&T TV Now. DirecTV Now had already imposed a $10 per month price hike back in March and consolidated DirecTV Now’s original 3 tiers into the 2 current tiers and included HBO with both of them. If you were to back out the $15 per month that a standalone HBO Now subscription would cost, then the “Plus” and “Max” tiers would be $50 per month and $70 per month, respectively.

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I’m pleased to present the 479th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Q2 was a very tough quarter for pay-TV operators, with cord-cutting soaring to a record level. This week we dive into the numbers and discuss why things have changed so dramatically since Q2 ’18. Then we transition to the Viacom-CBS deal, which was formally announced this week. Colin sees substantial upside, leveraging Pluto TV, which Viacom acquired earlier this year.

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I’m pleased to present the 476th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

AT&T had a tough Q2 in video, with a losses of 778K traditional subscribers (DirecTV plus U-verse) and 168K DirecTV Now subscribers. In today’s podcast we discuss AT&T’s road forward from here in video which rests on 3 pillars: traditional DirecTV and AT&T TV and HBO Max, neither of which has launched yet. In the podcast we discuss the  pros and cons of each and what impact they’ll likely have in the market.

In short, AT&T has lots of strong video assets but it’s not quite clear how the puzzle pieces will be put together to create competitive differentiation. What is certain though is that with loss of nearly a million video subscribers in Q2 and a huge debt load to reduce, there is significant urgency for AT&T to figure it all out.

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What a difference a year makes. In July ’18 when AT&T reported its Q2 earnings, its vMVPD DirecTV Now gained another 325K subscribers. It was the fourth consecutive quarter of 300K+ additions and DirecTV Now was setting the pace of growth for the nascent vMVPD industry that in turn was offsetting traditional pay-TV losses.

Flash forward to this morning’s Q2 ’19 AT&T earnings and the DirecTV Now narrative has changed dramatically. In Q2 ’19, DTV Now lost 168K subscribers, reducing its quarter end total to 1.3 million subscribers. Looking back over the past year, DTV Now peaked with 1.86 million subscribers at the end of Q3 ’18 when it eked out a 49K addition.

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I’m pleased to present the 464th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

First up this week Colin walks us through Nielsen and YouTube data he’s been analyzing that shows how 50-64 year olds are watching OTT video at a pretty significant level. According to his analysis, this group’s viewing could be at least 60% of the level of 18-34 year olds, which have been the main focus of many observers’ attention.

This adoption ties to our second topic which the Q1 ’19 loss of around 83K subscribers by DirecTV Now. Virtual pay-TV operators have a big opportunity to drive OTT viewing on connected TV devices, and Colin and I surmise these are taking up a bigger share of 50-64 year olds’ viewing which is more focused on long-form entertainment and sports. However the DirecTV Now loss shows that different players are benefiting differently from this shift.

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AT&T is revamping its programming packages for DirecTV Now, and one thing that is clear is that HBO is returning to its traditional workhorse role in driving consumer appeal for a list of ad-supported TV networks.

According to Cord Cutters News, AT&T will introduce two new packages, DirecTV Now Plus and DirecTV Now Max for $50/month and $70/month respectively. Subscribers to current packages will be grandfathered in, but will see a $10/month rate increase, so the current entry level Live a Little package will move up to $50/month.

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Large corporations’ priorities are testing creative freedom as more shows than ever compete for attention in the “Peak TV” era and video becomes a critical C-level focus. Exhibit A is Apple, which according to a report yesterday from the NY Post, is vexing creators with an abundance of suggestions (or “notes” in industry parlance) on their shows. The notes, which apparently include some from CEO Tim Cook himself, tend to emphasize Apple’s desire to keep shows “family friendly.”

The goal makes perfect sense; nothing is more important to Apple than its brand image. The prospect of seeing an “Apple Original” icon in the opening credits, followed by an opening scene including profanity, violence or nudity, would be a jarring juxtaposition. Yet this is the “Peak TV” world we now live in; with so many shows competing for viewers’ time, those that are most original and creative, and yes, often include attention-grabbing early scenes, stand out (for a point of reference recall that in the first minutes of Netflix’s “House of Cards” pilot, Kevin Spacey’s character puts a wounded dog out of its misery with his own hands).

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I’m pleased to present the 456th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

On this week’s podcast we cover 3 different topics. First, AT&T had a busy week - its deal for Time Warner was finally cleared after the DOJ’s appeal was rejected, both HBO CEO Richard Plepler and Turner president David Levy resigned, and a Variety report has Disney interested in buying AT&T’s 10% stake in Hulu. Colin and I discuss all of these and their implications.

Next, Colin weighs in on the new collaboration between the BBC and ITV to launch a version of BritBox in the U.K. and why it matters. Finally, another week, another YouTube content malefactor(s), leading to an advertiser pullback. We discuss how YouTube is playing whack-a-mole but that at the end of the day advertisers need YouTube and are unlikely to leave altogether.
 
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I’m pleased to present the 452nd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

This week’s news that DirecTV Now lost 267K subscribers in Q4 ’18 (a swing from 368K it added in Q4 ’17) raises critical questions about where the virtual pay-TV industry goes from here? As virtual operators’ discounted promotions trail off, prices rise, programming gets rationalized, competition rises and viewers turn to SVOD and ad-supported OTT options, a far more challenging road lies ahead for growing and retaining subscribers.

In this week’s podcast, Colin and I dig into these issues and speculate on whether, 2 years from now virtual operators combined are more likely to have 15 million subscribers or 1 million subscribers? In other words, which direction is this industry really going in? AT&T seems determined to play a key role with the collection of assets it has assembled. But timing and execution are critical to its success.

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Virtual pay-TV operator DirecTV Now lost 267K subscribers in Q4, ’18, per its parent AT&T’s earnings report this morning. DTV Now’s loss contributed to an overall loss of 658K video subscribers (including DirecTV satellite and U-verse) that AT&T sustained in Q4, the biggest in at least 3 years. DTV Now had approximately 1.6 million subscribers at the end of 2018, down from 1.86 million at the end of Q3 '18.

More noteworthy than the overall AT&T video loss is DTV Now’s strikingly quick reversal of fortune. Just one year ago, in Q4’ 17, DTV Now gained 368K subscribers, meaning its Q4 swing was a whopping 635K. Two years ago, in Q4 ’16, DTV Now gained 267K subscribers. For all of 2018 DTV Now gained just 436K subscribers, compared to the 888K subscribers it added in all of 2017. And to put the 2018 additions in perspective, they were mostly all front-loaded, with DTV Now gaining 654K subscribers combined in Q1 and Q2, then dropping to 49K in Q3 and then the loss of 267K in Q4.

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I’m pleased to present the 448th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Continuing our tradition for our final podcast of the year, this week Colin and I discuss the top 10 video stories of 2018 - at least in our humble opinions. Once again it has been a very active 12 months, with lots of innovation and change. Colin and I have had a great time analyzing and discussing the critical industry trends each week and we hope you’ve enjoyed listening to our thoughts in 2018.

Let us know what you think of our choices, whether you agree or disagree!

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