AT&T officially unveiled its “WatchTV” skinny bundle today, following its preliminary tease of it in late April. Though WatchTV only has 31 networks at launch, it’s a very respectable entertainment-focused group, including the newly acquired Time Warner networks, AMC, A&E, Food and HGTV, with select Viacom networks (BET, Comedy Central, etc) coming soon.
But the specifics of what’s included are a tangential; what’s most important to understand with WatchTV is that it is the latest, and most aggressive, salvo by AT&T to use “video as bait” to support its wireless business. This strategy has significant long-term implications for the TV industry.
In fact, WatchTV will only be available as part of 2 new wireless plans, AT&T Unlimited&More and AT&T Unlimited&More Premium, which will launch next week. AT&T said details on WatchTV being available as a $15/month standalone app will be “coming soon.”
There are 2 other important benefits of the new wireless offers. First, a $15/mo credit toward DirecTV, DirecTV Now or U-verse. This is an existing offer, and effectively brings DirecTV Now’s entry level $35/mo “Live a Little” tier down to $20/mo for 60+ channels. The second benefit is the ability to add a premium service (HBO, Cinemax, Showtime, Starz or Amazon Music Unlimited or Pandora Premium). These are typically $10-15/mo services.
So together that’s $25-30/mo of additional video benefits included for upgrading to one of the unlimited wireless services. And a subscriber ends up with a very solid array of programming available across all their devices.
AT&T’s video as bait strategy (along with the other carriers) has significant implications. With its aggressive financial incentives, AT&T is training customers to think of video as a low cost bonus feature that’s connected the more critical wireless service, not as a standalone premium offer itself.
This is of course the exact opposite approach that major pay-TV operators have taken. Comcast in particular has heavily promoted its Xfinity video service, powered by the X1 set-top box, as superior (note AT&T doesn’t even mention its own set-tops in these offers, instead just focusing on connected devices).
As consumers learn more about these low-cost, but increasingly robust video services, the idea of paying for expensive multichannel services and renting expensive, siloed set-top boxes is going to become more anachronistic. The good news for traditional pay-TV operators is that there’s real consumer inertia, so this will be a long drawn-out process. But every time AT&T pushes another aggressive video promotion like WatchTV, the shelf-life for traditional multichannel services shortens.