Next TV Summit 2016: Goncalves: No Skinny Bundles for DirecTV Now

AT&T exec says OTT not the driver for skinny packages
DirecTV Now 400x300.jpg

Get complete coverage of the Next TV Summit.

NEW YORK – As the fourth-quarter launch date of DirecTV Now nears, AT&T Entertainment Group senior vice president, strategy and business development Tony Goncalves said the over-the-top service won’t be riding the skinny bundle bandwagon like some of its competitors.

DirecTV Now is expected to offer more than 100 channels of live and on demand programming, targeted at younger viewers. But at the Next TV Summit here Wednesday (Oct. 20) during NYC Television & Video Week, Goncalves said while skinny bundles may work for niche offerings, that’s not the case for a broader service like DirecTV Now.

“In a scaled business, addressing the economic requirement that reach the most customers would require the need to cast a rather wide net,” Goncalves said in the fireside chat with Next TV editor and Multichannel News Technology editor Jeff Baumgartner. “You would need multiple skinny bundles to appeal to enough audience to get a scaled product. Our opinion is much of what is called skinny bundles evolve into something bigger. I’m not sure OTT is the driver of that.”

Goncalves also addressed some pay TV executives like Comcast chairman and CEO Brian Roberts, who has said he doesn’t believe there is a business model for OTT.

Goncalves said that all companies are different and have different strategies, adding that AT&T is a “mobile plus video company,” and that about 60% of mobile traffic is from video.

“Video is being consumed more and more over mobile, and if we’re going to provide that connectivity, we believe we need to participate in the content” going over that network.

AT&T has struck several content deals already for DirecTV Now and at last count had about 90% of the carriage agreements for the service completed.  But Goncalves hinted that next on the agenda may be a way to better secure local TV programming.

DirecTV Now has signed deals with NBC Universal and Disney that include their broadcast channels in their owned and operated markets. But at the Next TV Summit, he said ultimately he would like to have a service where a consumer who lives in one area can access broadcast programming in different markets when they are traveling.

“The last thing we want or our consumers want is the billboard effect,” Goncalves said.

How DirecTV Now does that will most likely require additional programming negotiations. Goncalves said that the current structure requires separate agreements for linear and OTT rights, but that should change as the business evolves. Still, he said AT&T and DirecTV have good relationships with their programing partners.

“Consumers aren’t telling us they want less content, they want more flexibility and seamless way of engaging with that content,” Goncalves said, adding that although the company has a great relationship with its programming partners, there is still a ways to go, but is confident DirecTV Now will get there.   

“I don’t believe there is another OTT approach that gives the programming community the opportunity we’re putting in front of them,” Goncalves said.