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For DirecTV Now, Thin Won’t Be In

NEW YORKAs DirecTV Now nears its fourth-quarter launch date, AT&T Entertainment Group senior VP, strategy and business development Tony Goncalves said the over-the-top service won’t be riding the skinny bundle bandwagon like some of its competitors.

DirecTV Now is expected to offer more than 100 OTT-delivered channels of live and on-demand programming, targeted at younger viewers. While skinny bundles may work for niche offerings, though, that’s not the case for a broader service like DirecTV Now, Goncalves said at the Next TV Summit New York.

“In a scaled business, addressing the economic requirement that reach the most customers would require the need to cast a rather wide net,” Goncalves said in the fireside chat with Next TV editor and Multichannel News technology editor Jeff Baumgartner. “You would need multiple skinny bundles to appeal to enough audience to get a scaled product.

“Our opinion is much of what is called skinny bundles evolve into something bigger,” he added. “I’m not sure OTT is the driver of that.”

Goncalves also addressed some pay TV executives like Comcast chairman and CEO Brian Roberts, who has said he doesn’t believe there is a business model for OTT.

Goncalves said that all companies are different and have separate strategies, adding that AT&T is a “mobile plus video company,” and that about 60% of mobile traffic is from video.

AT&T has already struck several content deals for DirecTV Now and at last count had completed about 90% of the carriage agreements for the service. Next on the service’s agenda may be a way to better secure local TV programming, Goncalves hinted.

DirecTV Now has signed deals with NBCUniversal and The Walt Disney Co. that include NBC and ABC stations in their owned-and-operated markets. But at the Next TV Summit, he said ultimately he would like to have a service where a consumer can access broadcast programming in different markets when they are traveling.

How DirecTV Now does that will most likely require additional content negotiations. Goncalves said the current structure requires separate agreements for linear and OTT rights, but that should change as the business evolves. Still, he said AT&T and DirecTV have good relationships with their programing partners.

“Consumers aren’t telling us they want less content, they want more flexibility and seamless way of engaging with that content,” Goncalves said, adding that although the company has a great relationship with its programming partners, there is still a ways to go, but he’s confident DirecTV Now will get there.

“I don’t believe there is another OTT approach that gives the programming community the opportunity we’re putting in front of them,” Goncalves said.