Will AT&T’s $15 Streaming TV Service Pay Off?

by Trefis Team
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AT&T launched a new streaming TV service called Watch TV priced at just $15 per month, undercutting Dish’s Sling TV (starts at $20 per month). The service will offer 31 live TV channels from top cable networks including CNN, AMC Networks, Discovery, and TNT among others, with another six channels from Viacom being added soon. While the service will work across carriers and platforms, the company will offer it for free with two of its unlimited wireless plans. Below, we take a look at the rationale for launching such a plan and how it could impact AT&T.

We have created an interactive dashboard analysis which outlines our expectations for AT&T (standalone) over 2018.

Why AT&T Launched The Service

AT&T could be looking to win over millions of cord-cutters who have dropped cable and satellite television services in favor of cheaper online options, while also potentially appealing to some so-called “cord nevers”. The company lost roughly 1 million subscribers at its DirecTV satellite and U-Verse platforms last year, and offerings like these could help to soften the blow, although ARPU will be significantly lower, with traditional cable customers paying upwards of $100 per month.

It’s also possible that AT&T is using the launch of the service to defend its position that its merger with Time Warner is actually good for customers, making a point that content costs are unlikely to rise significantly. The company first provided details about the service back in April, when it was fighting the Justice Department’s attempt to block the merger on anti-competitive grounds.

How AT&T Is Keeping Pricing So Low

AT&T will be keeping costs for the service low by limiting the number of channels. For perspective, the company’s own DirecTV Now streaming plans starts at $35 a month for some 60 channels, with the 120-plus channels package priced at about $70. More importantly, the company will be skipping sports programming, which is traditionally very expensive, although it is likely to offer basketball and baseball games carried on TBS and TNT. It’s also possible that AT&T could use an ad-supported model to keep its costs low. The company has been looking to ramp up its ad platform, by making smaller acquisitions in the ad tech and analytics space, and this could help it transfer some costs of programming from subscribers to marketers (related: Why AT&T Wants To Buy AppNexus).

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