AT&T's new DirecTV streaming service may need to fight for OTT territory

AT&T (NYSE: T) announced that it will leverage the DirecTV brand to launch an over-the-top video service "later this year," with no contract requirements and three main tiers of service.

The service provider's main offering, "DirecTV Now," will feature much of the current programming available on DirecTV's satellite pay-TV service, including live and on-demand content. "Customers can simply sign-up for the service, download the app and begin watching," an AT&T release said.

Additional offerings include "DirecTV Mobile," a mobile-first streaming service that enables access to premium video and original content via smartphone; and "DirecTV Preview," a free-to-access, ad-supported offering with showcased content from various networks as well as from Otter Media, the joint venture AT&T runs along with The Chernin Group.

Unlike Comcast's (NASDAQ: CMCSA) Stream service, users do not have to be AT&T broadband or wireless customers to sign up for the new services, which are expected to be available by the fourth quarter of 2016. Pricing and other content options are not yet known.

DirecTV Now, Mobile and Preview will be going up against a number of established linear OTT providers as well as an unknown number of soon-to-be-launched SVOD, AVOD and live linear services.

For example, CBS All Access was the first TV network to bring linear streaming to audiences, with the unique benefit of having a localized stream in the markets in which it operates. (This is important in order to get live news, among other things). Dish Network (NASDAQ: DISH) has offered its Sling TV service for just over a year now and has a solid subscriber base estimated between 523,000 and 600,000.

Other independent services have also set a firm foothold in the linear OTT market. YipTV is perhaps the most prominent; it already offers a free 17-channel linear package to subscribers.

Unlike YipTV's service, it isn't known yet how much content will be available via the free DirecTV Preview tier, or whether it will be linear or all on-demand.

AT&T is entering the mobile-first market significantly later than its main wireless competitors: Verizon (NYSE: VZ) launched its go90 OTT service last year, and T-Mobile (NYSE:TMUS) already responded to that challenge with its Binge On offering.

Binge On is a zero-rated feature that won't count video streaming from a number of popular services, including Netflix and Hulu, against its subscribers' mobile data caps. Verizon CFO Fran Shammo recently confirmed that beginning this week Verizon subscribers will be able to enjoy the same zero rating for the carrier's Go90 service.

AT&T already has a sponsored data program in place and analysts have speculated it could use it to provide zero-rated access for its mobile subscribers to DirecTV-based OTT services like the ones it recently announced.

If AT&T is hoping to lure broadband subscribers to take one of its three OTT packages in the areas in which it's established high-speed Internet service, it may already have to contend with the fact that those customers likely already subscribe to one or more major OTT services.

Bloomberg described the move as a game of catch-up to the rest of the OTT market, while Jackdaw Research analyst Jan Dawson told the publication that AT&T is simply trying to recapture cord cutters. "This is mostly about giving cord-cutters a way of staying with AT&T and maybe capturing some of the users that don't pay for TV," said Dawson.

For more:
- see the release
- and this Verge article
- see this Bloomberg article

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