Week In Review: AT&T, Back At It Again With It’s Own Streaming Service And An Addressable Marketplace.
1. AT&T/Direct TV Launches Its Own Streaming Service
AT&T announced this week that it would be launching its own nationally available streaming service, competition for Sling from Dish. Only instead of one service, AT&T will be launching three: a VOD-centric service, a live TV-centric service and a preview-centric service. (Details were still sketchy on how each would work, what carriage deals AT&T actually had in place, costs, and the like.)
Regardless, we’re not too high on the long-term chances for these national services mostly because of the way broadband works in the U.S.. While the idea of skinny bundles still makes a lot of sense, those skinny, internet-only bundles are going to come from whoever sells you broadband—it’s way too easy for your broadband carrier to offer better pricing and we suspect the difference between the services will be minimal. So while an AT&T internet TV app might cost you $20/month plus $50/month for Comcast broadband ($70 in total), Comcast will only charge you $60/month for broadband plus Stream (their proprietary internet TV service.) For a market that’s already price sensitive, that $10/month is going to be a dealbreaker for most consumers. (NB: These numbers are for illustration only. We have no idea what AT&T or Comcast’s ultimate pricing models will be.)
Why It Matters
The MVPDs are finally trying to be responsive to consumers, particularly younger consumers who don’t want to be tied down to an expensive pay-TV package. Satellite providers like Dish and Direct TV are most at risk here because they don’t have a broadband connection. Their pay-TV packages are sold on price and sports offerings, but with streaming apps’ low margins, that’s not a path they can head down. As MVPD TV Everywhere takes off, we suspect that a low-priced, internet-only bundle will be part of that offering (if nothing else, it brings new viewers into the ecosystem) Once that happens, the national bundles offered by Dish and AT&T will fade away, having paved the way for the next generation.
What You Need To Do About It
If you’re a network, make sure you wind up on whatever skinny bundle apps the MVPDs are providing, even if you have to break even to meet their pricing demands. The play here is to get younger users hooked on your programming so that they continue to seek it out and regard you as an indispensable part of their pay-TV universe. Get them to believe that, and you can charge them what you wish down the road.
2. AT&T Launches A “Programmatic/Addressable” Ad Network
Sort of.
Working with Videology, AT&T is going to start selling addressable advertising (aka “audience parting”) on its linear broadcasts. The ads will be purchased from a “private marketplace” that allows clients to use both their own data and AT&T’s to target viewers. The ads will also be national in scope rather than the local ads MVPDs usually serve up.
The reason we’re using quotes around “programmatic” is that, as the Wall Street Journal notes, “Unlike many digital ads, which are delivered to people in milliseconds and targeted to them based on their Web surfing history, the AT&T TV ads will still be placed within shows ahead of time, and advertisers will need to book ad space in advance.”
Still, it’s a major step in the right direction.
Why It Matters
The shift to addressable advertising on TV has been moving very slowly. Part of that is technology-based—set top boxes don’t lend themselves to targeting, especially with current tracking and ratings systems—and part of it is foot-dragging by the networks, who realize that an addressable system is a lot more work and carries some inherent risk. Still, having AT&T join Dish in putting out an addressable option puts the MVPDs at the forefront of the change and may send a message to the networks that they need to get their acts together in terms of addressable.
What You Need To Do About It
If you’re a network, you need to get over the notion that addressable and programmatic are a “race to the bottom” that will leave you impoverished. While there are millions of web sites a video ad can run on, there are still a limited amount of TV ad slots and thus that fear is unfounded—if anything, you might be able to charge more money for a more targeted audience.
If you’re a brand you need to start talking to your agencies and the networks more severely about why you need to start seeing some movement towards addressable and remind them how much happier you’ll be when they get there. Threaten to move more of your budget into digital. Do whatever it takes to get them to actually move from nodding their heads sagely when you mention addressable to actually doing something about it.
