Another TV Offering From AT&T? Don’t Groan

(Bloomberg Opinion) -- Introducing AT&T TV, a new video-entertainment service — yes, yet another one — that combines some of the best and worst aspects of cable television and aims to solve the frustrations of online streaming.

It's a solid effort by AT&T Inc. that could help untangle itself from the drab DirecTV business. But most important, the new AT&T TV brand eliminates some of the confusion around CEO Randall Stephenson's vision for the future of the wireless company, which has shape-shifted in the last year into a hulking conglomerate featuring an inelegant mix of pay-TV and media properties. What's clearer now than ever is that Stephenson is counting on AT&T TV, HBO Max and AT&T wireless to be the company's power hitters amid the arrival of streaming and 5G. AT&T TV launched nationwide on Monday, and HBO Max will become available in May (here's a review of that app).

First, the good news: AT&T TV is a really nice product. It's easy to set up and has the breadth of channels that cord-cutters might be missing. But the bad news is, it requires a box, only the first of which is “free,” and there's a subscription contract. Both are annoying remnants of the cable-TV era.

When I first held the box and its two cables (power cord and HDMI) in my hand, I thought to myself, “Is the future of TV really a cable box? Come on, AT&T.” But that slender box is a data treasure trove for the company and third parties, as its terms and conditions revealed upon booting it up:

AT&T and or DirecTV may collect and use location, app usage, voice commands, viewing and other data from the AT&T TV device or AT&T TV app to deliver services, advertising and offers… 

It was immediately obvious that a lot of thought went into AT&T TV's functionality. It breaks down the mental and digital barriers between different viewing methods — live linear, on-demand and streaming — that the industry had inconveniently compartmentalized. That is to say, AT&T TV is both a live-TV and on-demand service, as well as a platform for accessing others, including Netflix. It's all very fluid. To Comcast Corp.'s Xfinity cable subscribers, this may sound an awful lot like the X1 product, and it is. 

Cord-cutters already satisfied with their $13-a-month Disney+/Hulu streaming bundle or some other combination of apps probably won't see the appeal of AT&T TV, priced at $50 a month on its own for the first year ( a whopping $93 after that), or a promotional rate of $80 bundled with internet. But it could make a lot of sense for DirecTV customers to make the switch, as long as they have a sturdy enough Wi-Fi connection or live in the path of AT&T fiber.

Before I can go on, though, I must make a confession: I, the streaming-wars scribe, am in fact a DirecTV user (it's bundled with my rent). And so, I can confidently say that AT&T TV is significantly better than DirecTV — there's almost no comparison. No more waiting 10 to 20 seconds for the channels to change, which so often begins the painful process of assuming the remote buttons didn't register, then trying again and sending the TV into a state of utter pixelated confusion. Aside from two instances of AT&T TV bugging out for a brief moment in my first couple days of use, it has functioned smoothly (I don't know if the internet connection played a role).

Plenty of DirecTV users have already been fleeing the satellite provider, which Stephenson acquired for $67 billion in 2015. AT&T's total video-subscriber losses last year were an astonishing 4.1 million. It probably won't start off by targeting its own DirecTV customers with AT&T TV — the company loves the profit margins, after all — but it's a good alternative that customer-service representatives can pitch to satellite subscribers in the midst of canceling. Moreover, the company would have the opportunity to lure customers over to AT&T TV should it plan to sell the outdated satellite business.

Either way, DirecTV doesn't seem to be a brand core to AT&T's future. Last year, it changed the name of the DirecTV Now live-streaming offering to AT&T TV Now, so perhaps the writing is on the wall. 

AT&T TV is another step toward simplification. It also puts one foot in the future, while leaving one in the past. 

Ever since regulators and a federal judge gave their blessing to T-Mobile US Inc.'s takeover of Sprint Corp., the drumbeat of a potential merger between DirecTV and Dish Network Corp. has resounded. There still would be hurdles, though.

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.

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