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AT&T Launches DirecTV Now Service on New Video Platform

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Telecom and pay-TV behemoth AT&T Inc. (T - Free Report) has finally launched its much-awaited DirecTV Now mobile video streaming service, marking the company’s entry into the OTT space. Additionally, AT&T announced a new video platform for all of its video and television services. Notably, AT&T’s pay-TV rivals such as Dish Network Corp. (DISH - Free Report) has launched similar services in wake of the increased cord cutting in the pay-TV industry.

Pricing and Content

The basic package comprising 60 channels is priced at around $35 per month. Other packs range from $50 to $70 a month which will offer a wider range of channels. AT&T has been gearing up for the launch through the signing of agreements with content providers. The company has also reached a merger agreement with Time Warner Inc.(TWX - Free Report) that is expected to its boost media content. However, AT&T is yet to come into terms with CBS Corporation (CBS - Free Report) . Additionally, the non availability of a Digital Video Recording (DVR) feature may be a downside for some consumers.

What’s in it for AT&T?

Online streaming services are gaining momentum which is evident from the growing success of companies like Netflix Inc., which is a leading player in this space. This has resulted in massive subscriber losses for pay-TV operators. To put a check on customer churn, many pay-TV operators are adopting this model and AT&T is no exception. Moreover, since AT&T operates its own wireless network, the company can price its DirecTV Now offering by bundling wireless data packages with the OTT service. This will help draw new wireless customers. Additionally, with the advent of a streaming app, AT&T can generate revenues from mobile advertising – a fast growing industry.

The Bottom Line

AT&T’s DirecTV Now can prove to be a major revenue driver in the coming years. However, aggressive pricing related to non applicability of data caps for the service in wireless plans may be subjected to net neutrality scrutiny.

AT&T has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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