Strategic Changes on the Cards to Make Streaming a Competitive Space

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Investors may have felt that the Time Warner® acquisition was driven by a master plan, but you would not know it from AT&T’s actions over the last few months. While the management of the Dallas-based telecommunications company has been changing strategies to an extent amid middling results, it is yet to meaningfully hinder the rampant cord-cutting practice and Netflix’s rise. As per the Wall Street Journal’s report, the Dallas Telco giant is looking to alter plans for its forthcoming streaming service again.

WarnerMedia’s offering is expected to be less convoluted than the earlier plan, showing AT&T® is responding to some hard facts.

The new WarnerMedia streaming offering would charge around $17 a month. It would include Cinemax, HBO®, and Time Warner’s extensive content library. It is an offering which would rival nearly every content provider out there. John Stankey, the CEO of WarnerMedia, AT&T’s media division renamed from Time Warner, is pushing this service although it will be unveiled only in 2020.

He had sought to offer a three-tiered system first, one for films, another for blockbusters and original programming, and a third one for Warner Bros. (WB) content. However, as per Moffett-Nathanson’s analyst named Craig Moffett, that is likely to change to one unified service. The Texas-based best internet provider telegraphed this business decision when it restructured its media arm to further integrate Turner, HBO®, and WB into a unified division.

There is likely a reason AT&T’s media unit initially sought a three-tiered system – it features lots of diverse content. So, an all-encompassing service would not be able to maximize its profits through segmentation as a multi-tiered system would.

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Yet, it is highly unlikely that a modern customer would have the willingness or attention span to think about three different streaming options, particularly in a post-Netflix scenario. AT&T® is also learning this lesson with DIRECTV NOW®, its OTT streaming service mimicking a subscription-TV package. As per its site, DIRECTV NOW® provides seven different plans, tailored to different segments. AT&T’s streaming service had to drop some video content because of a decision to make HBO® part of all tiered packages, shifting its offerings about one year after its launch.

For all the shuffling and choices, it still shed some of its customers last quarter.

Further, AT&T® is reportedly looking to merge DIRECTV® with DISH Network®, which perhaps is an admission that satellite TV is not at a competitive advantage in the era of cord-cutting.

The Netflix-like streaming service from WarnerMedia seems a good proposition, but it does not mean its eventual success is a guarantee, particularly when it needs to compete with a lot of streaming players. AT&T® still has to establish itself as a major player in the streaming industry.

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