Windstream, looking to further its bond with its broadband customers pivoting toward online video solutions, has struck a partnership to carry AT&T’s DirecTV Now service to its consumer segment during the quarter.
The telco will deliver the DirecTV Now service under its Kinetic brand, which it created to house its broadband and entertainment offerings.
Windstream said that offering the AT&T product allows it to quickly scale its video platform while transforming itself from “a phone and Internet provider to a premium broadband and entertainment provider.”
Tony Thomas, CEO of Windstream, told investors during the company's third-quarter earnings call that the service provider’s agreement with AT&T will allow to more rapidly scale its video service offering to more consumers.
“Windstream has a great broadband network on the back of the hard work we did upgrading our infrastructure, but getting a really cost-effective entertainment option into all of our markets, we can obviously provide linear TV to a subset of our customers,” Thomas said. “This enables us to be an entertainment provider across our entire footprint. And it helps us, as you alluded to, on both retention of existing customers as well as in terms of acquiring new customers.”
Like its telco peer CenturyLink, which also has an IPTV service, the challenge lies in the company’s ability to scale the service and revenues in the face of rising content costs.
Newer video entrants like Windstream are at a bit of a disadvantage to larger cable operators who have long-standing relationships to muscle better deals with content owners and distributors.
At the same time, Windstream could use the DirecTV Now product to increase broadband ARPU as customers increase speeds on what’s going to be a lower-priced solution than a traditional linear TV product.
“It’s a great product that AT&T has put out there, and that's frankly going to only get better with time,” Thomas said. “We think it's a key way in which we can differentiate Windstream against the cable companies who have significant linear—a significant portion of their customers' bills relate to the TV services, and being able to go over the top is going to be a lot more cost effective for Windstream's broadband customers.”