AT&T Downshifts on DirecTV Now

Telco will go all in on thin-client streaming service
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AT&T has shifted its focus from its two-and-a-half-year-old virtual MVPD, DirecTV Now, and is currently focused on the launch of a premium pay TV service delivered over a proprietary thin-client set-top.

That was the key takeaway from David Christopher, president of AT&T Mobility and Entertainment, who spoke at the Bank of America Merrill Lynch Telecom and Media Conference.

AT&T is shifting focus from DirecTV Now (pictured) to a new service delivered via thin client.

AT&T is shifting focus from DirecTV Now (pictured) to a new service delivered via thin client.

AT&T has emphasized DirecTV Now “slightly less than we did when it first launched, because we are focused more on other elements of the portfolio, of rounding out the portfolio,” Christopher conceded.

The company is currently in beta on another internet protocol-delivered pay TV service, he said, one that’s designed to be delivered over a proprietary thin-client set-top and which is set to debut nationally later this year.

“It is going to have a low-cost piece of hardware that you install just like you would in Apple TV and that allows us to do several things,” Christopher explained. “One is, from a business-model perspective, the cost of acquisition is much lower. We don’t roll a truck, we don’t have somebody climb a ladder and so you think about the subscriber acquisition cost of this as being somewhere around half of what your satellite installation is. Secondly, because it’s self-install, it’s extremely easy for the user to get up and running.”

The device, Christopher said, “offers some really important functionality that we’re super-excited about. I’m not going to go into all the details here, but modern UI, really, really great search and navigation capabilities, application support, etc.”

This isn’t some new disclosure — AT&T executives have been speaking openly about their so-called thin-client service for more than a year now.

Notably, though, Christopher did reveal AT&T’s strategy in regard to hardware — customers will need a box, but secondary rooms can use apps to access the service.

“You don’t get all the benefits if you just make it an application,” Christopher said. “By having a piece of hardware that is really elegant and very seamless and easy to self-install, you can do things from a customer experience perspective that are more evolved and more capable than just running on somebody else’s hardware … It doesn’t mean we won’t have an application that can run on somebody else’s hardware for a second or third bedroom, etc. So we’ll play with that and think about that as we get to market.”

As for DirecTV Now, the service was once the apple in AT&T’s eye, its growth fueled by steep promotions tied to wireless products and services.

But AT&T put the promotional brakes on late last year, and the virtual multichannel video programming distributor has been in free fall ever since, losing 83,000 more customers in the first three months of this year.

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