AT&T confirmed reports that its new IP-delivered pay TV service will be called AT&T TV, and will launch in beta in select markets “later this summer.”
The wireless company made the confirmation during its second quarter earnings report Wednesday.
“We have some really high expectations for this product, and we’re going to learn from the pilot, and then we’ll expand to more cities as we go to the year,” said Randall Stephenson, CEO of AT&T. (Stephenson’s comments were provided by Seeking Alpha.)
Unlike AT&T’s current flagship virtual pay TV service, DirecTV Now, AT&T TV—which the company previously described as its “thin client” service—will include a full bundle of channels, and it will ship with a self-install set-top.
However, the service won’t require truck-roll installation, or the launch and maintenance of satellites.
“This thin client product that we’re bringing to market, it literally takes the customer acquisition costs and cuts it in half,” Stephenson added. “And the beauty of that is that you can begin to address a fundamental problem with the current linear TV business, and that is the price point, but the content costs just continue to grow.”
Describing AT&T TV as the “work horse” for AT&T’s pay TV aspirations for the next several years, Stephenson added, “We’ve got to find a way to get the cost curve down on this product, so we can keep people into the product for a longer-term basis. So, as you drive customer acquisition costs in half on AT&T TV, the new product we’re bringing to market, then you can bring the price points down and hold margins and still have the same value equation from a customer standpoint.”
AT&T’s choice not to leverage the DirecTV brand name for either its new SVOD service, HBO Max, or its new IP pay TV product is conspicuous, given the company’s $67.1 billion investment to acquire DirecTV just four years ago.
“The DirecTV product is going to have a really long life, and they’re going to be segments of the market for a long time, but that’s how you’ll address those segments of the market,” Stephenson said.
He also touched on NFL Sunday Ticket, which is entering its final year on DirecTV under the current multi-billion-dollar distribution deal.
“That’s something that served DirecTV well for many years,” Stephenson said. “However, unfortunately, right now, that content is tied to our satellite product. And so, it serves a good value as we come into the fall. It’ll be an important retention tool. But in terms of an opportunity to grow our business with that, when it’s anchored to a satellite product, it’s kind of hard to utilize it.”
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