DirecTV Now launch operative Tony Goncalves: No worries about cannibalization here

Image: AT&T / DirecTV
hot seat
With Tony Goncalves, senior VP of strategy and business development for AT&T Entertainment Group

Set to launch in the coming weeks, AT&T’s DirecTV Now virtual MVPD platform represents the most highly anticipated pay-TV product to come along since satellite dishes started appearing on homes 20 years ago.

One way or the other, this IP-based service, delivering over 100 channels, including most top networks, over the top for $35 a month, is going to change the business.

How fast will DirecTV Now grow in a market where a cheaper, much skinnier offering, Dish Network’s seminal Sling TV, is approaching — or has even surpassed — 1 million users less than two years since launch?

What will happen to traditional cable, satellite and telco-based services when consumers learn they can get most, if not all, the channels they want, for under $50, without a contract, or even a van showing up at their house? Are predictions right? Will 15 million U.S. homes be using live-streamed OTT pay-TV by 2020?

Of course, as Dish has found out, the technology involved with live-streaming over the internet is tricky. And if DirecTV Now is full of bugs, traditional video services could find their position in the market actually validated.

With so much on the line for AT&T and the pay-TV industry, FierceCable caught up with one of the telco’s key Entertainment Group operatives, Tony Goncalves, to discuss the DirecTV Now launch.

FierceCable: With DirecTV Now, does AT&T see a market of just young adults who have never had pay-TV? Or is the market broader than that?

Tony Goncalves: We believe there’s a market of approximately 20 million households who currently do not subscribe to pay-TV. It’s not only younger consumers. We’re looking to attract both cord-nevers and cord-cutters -- those who want more choice and flexibility to access a premium content bundle more tailored to their lifestyle.

FierceCable: How much concern is there that a live-streaming service will cannibalize the core satellite TV business?

Goncalves: Our new services effectively broaden our reach to address segments of the market who are not currently pay-TV users or were difficult to reach (e.g., no line of sight). We’re primarily targeting those 20 million households. We are not concerned about cannibalization because we want to provide our customers with the widest range of choices we possibly can and match them with the video service best suited to their individual needs.

FierceCable: What kind of customer feedback have you received in regard to livestreaming? What are customers saying they want?

Goncalves: For customers of our existing DirecTV and U-verse pay-TV services, livestreaming is one of the most popular features. With the DirecTV app in particular, we’ve seen more than 100 percent growth in unique streamers over the last year. More than half of these streams are live TV, including news, sports and lifestyle programming. That’s why live TV will be an important part of our OTT strategy, along with on-demand content.

FierceCable: How challenging is it to carve out programming deals for livestreaming services? Are networks pretty open to the discussion now? Is it hard to negotiate on deals that are already done?

Goncalves: Our content team has put in a lot of hard work securing more than 100 channels and counting for DirecTV Now. And, we are proud that we will open new ways for customers to help expand the reach of premium content.

FierceCable: What are the technical challenges of launching a livestreaming service? Are turnkey vendors being approached by AT&T, or is most of the tech developed in-house?

Goncalves: We’ve been successful at streaming live video for many years. With football we’ve demonstrated how to handle huge demand for streaming live events. And with our DirecTV app, more than half of streams are live TV. For DirecTV Now, we’re using what we’ve learned in combination with our QuickPlay acquisition to help ensure we can deliver premium video content to any device and over any broadband network.

FierceCable: What will be DirecTV Now's edge over incumbents in the marketplace?

Goncalves: AT&T has a terrific and differentiated combination of assets to make entertainment and mobility work better together for our customers. Our goal is to provide a premium and effortless mobile entertainment experience. By combining DirecTV Now with our other products and services, we believe we’ll have a competitive offering that will give consumers another option to meet their entertainment needs.

FierceCable: How price-sensitive is the market? Do you have to have a skinny bundle to win?

Goncalves: We are providing customers more choice at a very competitive price point. We are trying to redefine the traditional TV viewing experience and provide unique value by combining the depth and breadth of the premium TV ecosystem and unparalleled connectivity with our broadband and mobile networks. All at a simple, straightforward price for our customers and we believe that’s a winning combination.