October 6, 2016 —
AT&T’s widely reported move into video programming ownership falls right in line with the industry trend away from just being the “dumb” pipe for someone else’s content. Bloomberg News reported that the carrier is ready to spend between $2 billion and $50 billion on the likes of AMC Networks, Discovery Channel or Time Warner.
The immediate reason for branching out into original content development would be the price war going on in wireless and sinking ARPUs. But the entry of Comcast, which owns NBC Universal, and Charter Communications into wireless cannot be ignored. Not to mention Verizon’s entry into digital content with the purchase of AOL and YAHOO.
Add to this the report that AT&T plans to phase out Direct TV’s satellites in three to five years and the unveiling of the over the top (OTT) internet streaming service “Direct TV Now.” The strategy appears geared toward the Millennial generation that wants content wherever they are, whenever they want it. Consumers don’t care how a product is delivered, whether over macrocell, small cell, Wi-Fi or an aggregation of all three.
The delivery method has become commoditized. Consolidation between AT&T and T-Mobile and between Sprint and T-Mobile were both blocked, which has led to price wars. Video, virtual reality (VR), augmented reality (AR) or whatever comes next are the value-added services that the Big 4 carriers must have to provide the revenue growth their shareholders desire.
Analogous to the current wireless dive into content development is Verizon’s approach to the internet of things/anything (IoX). Instead of building the pipe for everyone else’s IoX product and essentially becoming the dreaded overhead that every company wants to cut, Verizon has been on a buying spree of fleet management, connected cars and LED sensor companies, including Fleetmatics, Telogis and Sensity, respectively.
Who would ever have thought watching TV over a satellite would become passe´? At some point, the consumer becomes more interested in the content than the medium. And they forget its even over a satellite until there is a lightning storm in the southern sky, which knocks out the broadcast. At what point will consumers be less interested in whose wireless network they are on and become more interested in which wireless OTT video/AR/VR package that they most desire?