AT&T exec: Economics of skinny bundles 'don't work'

Tony Goncalves, AT&T (NYSE: T) senior VP of strategy and business development, described the pay-TV industry's dabble into skinny bundling as a trend that cannot last. 

Speaking at San Francisco's TV of Tomorrow conference Wednesday, he said, "This notion of skinny is fine, until the economics don't work," adding that the concept of breaking apart the pay-TV programming bundle and offering consumers a small, custom-selection of channels simply isn't scalable. 

"Skinny will turn to fat sooner or later," Goncalves told Variety, following his panel discussion. 

A longtime DirecTV executive, Goncalves said new virtual pay-TV services being developed by AT&T, such as DirecTV Now, will include a programming bundle not too different than what is found in a traditional pay-TV package. 

"We want to have the ability to give [customers] pay-TV as an app," he said. "We've got to un-tether it from the set-top."

Earlier this week, it was reported that AT&T and its video programming partner, The Chernin Group, are readying the launch of a new subscription-based mobile video service themed around anime, video games and niche action sports.

The new platform is being developed by San Francisco-based Ellation, which is part of Chernin's Otter Media joint venture with AT&T. Falling under the Ellation umbrella is Crunchyroll, an anime-focused SVOD platform touting 800,000 paid subscriber. Crunchyroll would reportedly be leveraged in AT&T's new video platform. 

Goncalves said AT&T will make Otter's online platforms a business development priority going forward. "We are a pretty huge distribution machine," he added. 

For more:
- read this Variety story

Related articles:
Verizon, ESPN settle lawsuit over FiOS Custom TV skinny bundle, but terms not disclosed
Comcast/NBCU in talks to compete with itself in Hulu skinny bundle
TWC offering $10-a-month skinny bundle with 50 Mbps broadband sign-up
AT&T readying launch of subscription-based mobile video service, report says

Suggested Articles

When Charter and Disney earlier this week announced their new carriage agreement, they included news about cooperatively working against video piracy, which…

Cord cutters who opt for streaming video services instead of traditional pay TV will inevitably increase their broadband consumption. But some new research…

A cord-cutting catastrophe struck the U.S. pay TV industry in the second quarter and took a collective 1.53 million subscribers with it. Or maybe not, but it’s…