Tuesday, October 4, 2016

DirecTV is Not a Competitor to U-verse; OTT is the Replacement for Linear TV

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AT&T executives now have said that its new DirecTV Now over the top service will become the company’s primary video service within three to five years. That might be called the third shift in AT&T video services strategy.

First, there was U-verse video, delivered over the fiber-to-neighborhood network. Now AT&T primarily relies on satellite delivered DirecTV.

So a shift to primary reliance on OTT delivery would be the third shift in platform. There are some important potential implications. Some now argue that AT&T will shut down the satellite service entirely, at some point, in favor of OTT delivery as the sole distribution method.

There is a bit of irony there. When the DirecTV purchase first was announced, and before the approvals process was completed, some might have argued that AT&T was going to abandon U-verse.

That basically is happening. AT&T pushes new subscribers toward DirecTV, and not U-verse video. The U-verse brand apparently will be discontinued. At the same time, AT&T plans to zero rate DirecTV Now usage by customers of its mobile services.

What now seems to be shaping up is not just a DirecTV replacement of U-verse, but replacement of both U-verse and satellite delivery by a switch to streaming, on all AT&T network platforms, mobile and fixed.

So as it might well turn out, DirecTV was not a threat to U-verse. Instead, all linear delivery will be phased out in favor of streaming over all AT&T networks, fixed or mobile.

By zero rating entertainment video consumption, AT&T and others also are demonstrating that the entertainment video service is a managed service, like cable TV, satellite or telco TV, and not an “Internet” service.

By incorporating access into the cost of the purchased video content, AT&T and others are using the media, broadcast and linear video models, where delivery bandwidth is simply incorporated into the price of the product.


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