As video service providers begin to offer services that can be viewed on any screen, it’s widely believed that such TV Everywhere offerings will soon become table stakes.
Will this be a commodity offering – or is there some way for a service provider to differentiate its offering?
Comments made by AT&T executives last week suggest that its working hard on what could be a differentiator for its TV Everywhere offering.
LTE broadcast capability and “the ability to prioritize/ exempt from metering AT&T’s own mobile video offering” is part of AT&T’s “next growth priority,” wrote researchers from financial research firm Bernstein Research last week. Wall Street Journal reporters also met with AT&T executives last week, reporting Monday that AT&T was contemplating an offering that would enable their video subscribers to stream NFL football games to their AT&T mobile devices without having it count toward their monthly data allotment.
This seems like a great idea for a company like AT&T that offers both subscription video and mobile data as it also would encourage customers to use the same company for both offerings. Once we understand this, it’s easy to understand AT&T’s motivation for purchasing DirecTV.
According to financial research firm Moffett & Nathanson, AT&T offers its own U-verse video service in about 25 percent of the U.S., measured by population. But the company reaches close to 100% of the population with mobile data service. Without DirecTV, AT&T would be able to offer its unmetered streaming service – and gain associated benefits such as lower churn – in only a quarter of its wireless serving area. The DirecTV deal would bring AT&T’s video footprint in line with its wireless footprint, potentially enabling the company to get a lot more benefit from the proposed unmetered subscription video streaming offering.
As the only other company offering both video and wireless services, it wouldn’t be surprising to see Verizon gearing up to offer something akin to what AT&T is proposing. But Verizon’s FiOS video offering is only available to 14 percent of the U.S., according to Moffett Nathanson, which means a Verizon acquisition of Dish Network—or a partnership to offer unmetered streaming to Dish subscribers—could make sense.
Alternatively Verizon could cut a deal with some of the major cable companies to offer unmetered streaming of cable company video. But that would seem an unlikely possibility, considering that Verizon’s previous co-marketing and product development deal with several of the major cablecos seems to have fallen apart. And Verizon wouldn’t gain the same level of synergies that a merged AT&T/ DirecTV would garner.
It’s also important to note that cable companies are aggressively pursuing a different wireless strategy. They’re making a substantial investment in Wi-Fi in high-traffic areas, and that infrastructure already offers a way to watch unmetered subscription video – for some content at least. It’s not TV Everywhere, but for a lot of customers, it could be TV Everywhere-that-Matters.
Sprint and T-Mobile
Among the major video and wireless service providers, the only companies we haven’t mentioned yet are Sprint and T-Mobile. Like AT&T and Verizon, they also have the potential to offer unmetered video streaming, but unlike AT&T and Verizon, they don’t have their own video offering.
Like Verizon, that makes them potential candidates to buy Dish or to partner with one or more cable companies. But the cable companies also have a failed partnership with Sprint in their past and considering ongoing rumors that Sprint wants to buy T-Mobile, the cablecos probably aren’t interested in a deal with T-Mobile, either.
It’s also important to remember that Dish has its own spectrum – and the company has talked about using the network to support mobile video, as well as other services such as fixed broadband wireless.
Some people have questioned whether Dish has the capability to build its own network. But Sprint has said it would be open to letting someone like Dish share network resources including Sprint towers. And the companies already are partnering on some fixed broadband wireless deployments. Accordingly, it wouldn’t be surprising to see the two companies strike some sort of network construction deal and to also partner on unmetered wireless streaming of Dish content.
That relationship wouldn’t have to be exclusive, however. Potentially Dish could strike other unmetered streaming deals with Verizon and T-Mobile, while Sprint could also strike deals with Verizon (on the landline side of the house) or the cablecos – although that seems less likely.
The upshot is that as TV Everywhere catches on, Dish could be an increasingly attractive acquisition or partner for Verizon or Sprint. (T-Mobile could end up in the Sprint fold or, more likely, will figure out some Un-Carrier TV Everywhere option that is unlike what everyone else ends up doing.)
It could take a while before TV Everywhere triggers any M&A activity, however.
The industry will first want to watch what transpires with the unmetered subscription streaming offering that AT&T has proposed for U-verse – an offering that undoubtedly will be closely scrutinized by wireless and video providers alike.
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