AT&T Takes an Initial Step Into Monetizing OTT Video

Maria Dillard, VP, video products, AT&T U-verse

Maria Dillard, VP, video products, AT&T U-verse

By Fred Dawson
February 14, 2013 – AT&T’s move to explore the monetization potential of multiscreen premium TV service should generate some much-needed feedback on the opportunities for MVPDs in the OTT space, but the really interesting aspects to the carrier’s U-verse initiative may be found with future steps it is likely to take in this direction.
AT&T executives are not willing to discuss specifics beyond the first move, which is to offer a limited package of 1,500 mostly long-tail movie titles to subscribers at $5 per month in contrast to the usual VOD per-viewing fee model. But they make clear they’d like to go much further if business conditions, namely, licensing policies of content suppliers, allow.

The new serviced, dubbed “Screen Pack,” is available to U-verse subscribers for unlimited, instant playback through the IPTV system on their TV sets or via broadband and mobile connections to their tablets and smartphones anywhere they are, officials said.

“We know customers have more options than ever before to watch their favorite movies, and U-verse Screen Pack gives them a convenient and valuable way to access a large variety of movie titles, whether it’s on the device in their hand or on their big screen TV,” said Jeff Weber, president of content and advertising sales at AT&T Home Solutions. “Our customers have told us they want subscription on demand services and we’re delivering.”

As previously reported, AT&T has committed to an expansion of its U-verse service, now available to 24.5 million households, to reach another 8.5 million within the next three years while at the same time eliminating DSL service across 25 percent of its customer locations in favor of delivering fixed as well as mobile service over its LTE infrastructure. Significantly, as AT&T chairman and CEO Randall Stephenson put it during a press conference in November, over that three-year period the carrier intends to “move to an IP-only network meshed seamlessly with wireless” while increasing the data throughput on LTE by adding more spectrum and over 40,000 small cells nationwide.

Along with introducing Screen Pack as a ubiquitously available subscription add-on for U-verse subscribers the company has been gradually expanding the portfolio of on-demand content, including TV shows as well as movies, that can be purchased a la carte by U-verse subscribers for viewing on connected devices outside the home, notes Maria Dillard, vice president of video products at AT&T U-verse. “Little by little we’re bringing more new releases into the multiscreen environment,” Dillard said.

As things stand now, U-verse offers over 280,000 on-demand titles for purchase by subscribers connected directly through the IPTV fixed-service network. People served by U-verse IPDSLAM, the soon-to-be-completed broadband upgrade where DSL connections will remain operative in markets representing 24 million households, are not offered the IPTV service, which means that when the three-year U-verse expansion is completed only about 45 percent of the carrier’s fixed service market of 76 million locations in 22 states will have access to an AT&T branded video service.

After undergoing a review of its video service strategy in 2012 the carrier decided not only to stay the course in the multichannel TV business but to expand it with the added U-verse network buildout. Why? “We make customers even more pleased when they can bundle additional services,” Dillard said. “If they have broadband and wireless and we can attach TV to it, we have stickier customers.”

Which raises the question of how AT&T might serve the video service needs of customers not connected to U-verse TV-capable networks. While Dillard wouldn’t comment on any plans in this regard, she said, “If you look at what’s going on in the industry, the OTT model is there, but there’s a business model that has to be worked through.”

Right now, she emphasized, “our site gives you the ability to get content there [if one is a U-verse subscriber], and there is the ability to do some streaming on that site. But I can’t comment farther.”

Does this mean there’s been no decision to pursue a branded AT&T OTT video service? “I’m not commenting,” she replied.

Any such branded service would logically be extended to the 19 million or so households to be served by LTE as a replacement to the retired DSL connections, and, indeed, would likely be part of a branded service offered to LTE customers everywhere, including any who chose to rely on LTE as an alternative to wireline broadband and TV in other parts of the country. In other words, AT&T could be looking at making some kind of OTT video service ubiquitously available as a bundled component of LTE, just as Verizon is hinting it might do (see p. 1).

Asked whether the anticipated bandwidth capacity on its LTE network, especially where it will be offered as a replacement to the abandoned DSL plant, would be sufficient to support a compelling video service, Dillard said, “If you look at what we’ve announced at this point, certainly with what we’re building out with our VIP (Velocity IP) program we’re looking to make sure we’re taking care of all our customers’ needs. I’ll just put it to you that way.”

On another front, AT&T continues its aggressive pursuit of second-screen apps, which started four years ago with its implementation of TV navigation and VCR control through the iPhone, which has since been extended to the iPad and Android devices as well. In its latest efforts long these lines the carrier has tapped the place-shifting capabilities of PacketCable’s Twonky platform to allow U-verse subscribers to transfer videos from their smartphones and tablets to the TV.

“It’s called U-verse Enable,” Dillard said. “For example, it allows you to search on your tablet or smartphone for online videos from sources like YouTube. I can hit the Twonky Beam button on the app and get that on screen in my home.”

Similarly, she noted, with an app dubbed “Pix & Flix,” which was created in the AT&T developers’ lab, U-verse customers can push photos stored on mobile devices to the TV screen utilizing customizable view settings to present the photos individually, in slide show mode or other ways. They can also connect to their personal Facebook accounts and view those photos on the TV.

These U-verse Enable apps along with all the others developed for the service can be accessed at no cost directly through the U-verse navigation interface or through app stores associated with subscribers’ devices, Dillard said. The company has also begun working with programmers and advertisers to develop second-screen advertising opportunities, she noted.

The carrier is exploiting the managed service connection of U-verse and the home gateway to enable the kind of synchronized viewing that requires fingerprinting or other automatic content recognition modes in instances where interactive apps are offered independently of the service provider’s participation. U-verse subscribers are discovering that “if I’m watching a TV episode I’m going to get more content on my connected device,” Dillard said. “That app on the tablet knows what you’re watching.”