AT&T is taking the future of its TV business to the internet and bringing with it some familiar features from yesterday’s TV era, including a set-top box, two-year contracts and prices that nearly double in the second year.
After six months of testing its cable-like online streaming service in 10 cities, the company is launching AT&T TV nationwide Monday with four programming packages starting at a promotional price of $49.99 a month for 155 channels. That price jumps to $93 in the second year of the contract. The premium plan is priced initially at $69.99 for 255 channels and increases to $135 in the second year. All of the offers require a two-year contract.
The service rides on home broadband connections, allowing AT&T to avoid the costly installation items of traditional TV, like new wiring, wall-mounted equipment boxes and home visits by technicians. In development for nearly seven years, the online approach is what AT&T has called its future “workhorse,” and the primary platform to eventually replace its DirecTV and U-verse TV systems. Subscribers will also have access to AT&T TV via an app on smart TVs, phones, computers and tablets.
“This product is unique in the industry. It’s not a legacy service, it’s a very different model,” AT&T Communications Chief Executive Officer Jeff McElfresh said in an interview. As trends have changed in video, with more choices and devices, AT&T has designed the service to appeal to everyone, “the complete addressable market,” McElfresh said.
Maximize Profit
AT&T is trying to maximize profit on the service, which is priced higher than many other online-TV offerings even though the cost of the “plug-and-play” installation is dramatically lower than providing cable or satellite TV.
The Dallas-based company is struggling with a declining TV business. Last year, AT&T lost more than 4 million TV subscribers as viewers continued to flee to longstanding video challengers like Netflix and Walt Disney’s Hulu. The competition isn’t letting up, as seen in the fast rise of Disney+ and the coming launch of the Peacock streaming service from cable-and-entertainment colossus Comcast.
To assist with the rollout, the company has enlisted streaming-TV rival Google to help make the AT&T TV users’ experience a little smoother. Each subscriber gets an in-home setup that includes a small cable box running Google’s Android TV software. The box comes with a remote that has a Google Assistant button that uses voice commands to navigate TV selections, find shows and even order takeout.
In most areas, AT&T TV includes the four major broadcast networks -- ABC, CBS, NBC and Fox -- and regional sports. The service comes with 500 hours of network DVR storage. The Netflix app, YouTube and Pandora are available through the AT&T box, but Amazon’s Prime Video and Hulu aren’t. Customers in parts of 21 states, where AT&T fiber is available, can get a broadband-and-TV package for a promotional price of $80 a month, which will expire after the first year.
Cord Cutters
AT&T TV is aimed at traditional pay-TV customers who are cutting ties to their cable and satellite services. AT&T TV’s relatively big-bundle online service will compete with other streaming-TV options -- including, somewhat confusingly, its own existing AT&T TV Now, which will continue to start at $65 a month for 65 channels.
Other online-TV competitors include Sling TV, owned by satellite rival Dish Network, which offers more than 50 channels for $45 a month, and Google’s YouTube TV streaming service, with more than 70 channels for $49.99 a month.
To help attract customers, AT&T TV is using free, limited-time offers of premium channels, including the company’s own HBO programs. The promotional effort will include HBO Max, the streaming service due to debut in May, McElfresh said. HBO Max will include the company’s Turner and Warner Bros. shows, such as “Friends” and “The Big Bang Theory,” in a beefed-up program lineup to help fight back against the big content libraries of Netflix and Disney.
HBO Max offers will be bundled across AT&T’s TV and wireless services, McElfresh said. “You can expect to see some very attractive offers around HBO Max in our Elite package,” he said, referring to the company’s top-tier unlimited wireless plan.
AT&T says it will waive a $30-a-month unlimited-data fee for subscribers who bundle the TV service with AT&T broadband. Like Comcast and some other broadband providers, AT&T caps data use. AT&T customers on lower-tier plans are limited to 1 terabyte of data a month. The penalty for exceeding that cap is $10 for every additional 50 gigabytes.
--Bloomberg News
