Making Content More Mobile: The AT&T Way
Eddie Hold, President ;
AT&T announced its intent to purchase Time Warner this weekend in a move that is sure to raise a few eyebrows at the FCC and DOJ. In theory, it’s a “vertical” acquisition, meaning that there is (almost) no overlap between the AT&T and Time Warner assets, and, typically, vertical deals meet with regulatory approval. But there is vertical, and then there’s the layering of content on top of mobile and fixed networks to form a competitive advantage. And that is where the fear sets in.
The competitive advantage in mobile is becoming harder to find: network coverage is becoming close to parity, the range of devices available on each network are the same, and this means that pricing becomes the only lever. That’s clearly not a great strategy as a race to the bottom ultimately helps no one. And so, the carriers are all looking to differentiate through content, while rapidly turning data services into a commodity. To be clear, this isn’t a new strategy for the carriers, which have tried many variations over the years. But with broadband data speeds now more than capable of supporting video, it is a strategy that is now working.
T-Mobile’s approach has been Binge-On; offering data-free access to a very broad range of video sources that the carrier has partnered with. Verizon and AT&T are taking a more aggressive stance, with both looking to take a content ownership approach, rather than just content partnerships. To that end, Verizon is in the throes of purchasing Yahoo! (and the related assets), developing the Go90 mobile service, while also offering exclusive NFL content for mobile.
But what AT&T is doing is bigger and bolder. Just last year, AT&T acquired DirecTV, which firmly moved AT&T from being a mobile company (plus enterprise communication) to being an entertainment provider. The key goal here was to begin to merge the home and mobile services to provide ubiquitous access to entertainment content across multiple platforms. DirecTV meant that AT&T had the opportunity to provide home-based entertainment service on a national basis, matching its mobile footprint. And, of course, DirecTV already has the distribution rights for this content.
Adding Time Warner to the mix is an interesting expansion that does not necessarily bring the “benefits” that much of the initial media fears and concerns have focused on. There are concerns that AT&T will have too much power across the entertainment “stack,” meaning that AT&T customers could gain early access to content (ahead of other cable providers) or could even make some content unique. Imagine a world where HBO’s “Game of Thrones” is only available if you subscribe to AT&T, for example. Now, having imagined this scenario, disregard it: not only would such an approach simply not be permitted by the regulators, it has little long-term benefits for AT&T.
Consider instead, the fact that AT&T will now have immediate digital rights to leverage the Time Warner content across both fixed and mobile networks. That does give AT&T, potentially, a head start in launching a true mobile-first entertainment strategy. Additionally, AT&T probably has some very strong ideas about how to migrate the movie content to a digital future that stretches beyond Ultraviolet and the other electronic variations of today. As such, the competitive threat from this deal lies exactly where one would expect it to be: faced squarely at the other mobile operators.