Deeper Dive—Why AT&T sold Quickplay now

Quickplay was much more important as a supplier of video plumbing elements to AT&T while having to deal with satellite and multicast. (AT&T)

AT&T’s big news this week was the nationwide launch of AT&T TV, its new IP-based TV service. The company’s sale of Quickplay was a smaller headline, but it could have a lot to do with AT&T TV.

On Tuesday, Firstlight Media announced that it’s partnering with Highview Capital Partners to buy Quickplay, a company specializing in distributing video content to connected devices. The companies are combining and André Christensen, who previously worked at both AT&T and Quickplay, will run the show.

AT&T has been selling off assets as it works to pay down debt and reduce operating costs so another divestiture isn’t out of the ordinary. However, Rethink Research’s Thomas Flanagan hypothesized that the sale of Quickplay is closely tied to the arrival of AT&T TV and the subsequent migration away from U-verse and DirecTV. AT&T has approximately 20.4 million video subscribers across DirecTV (a satellite broadcast service) and U-verse (a multicast IPTV service) along with AT&T TV Now, its streaming TV service. Now the company is taking on the tremendous technical challenge of transitioning those subscribers over to AT&T TV, a unicast service.

It’s shaping up to be the “world’s largest ever unicast transition process,” Flanagan wrote in a research note. He said that Quickplay was once key to AT&T for providing agility, and improving the ability to offer frequent updates and quality of service (QoS) guarantees while handling high levels of traffic, removing choke points for efficient delivery of OTT services.

“However, in recent years AT&T has migrated much of its OTT resources over to AWS [Amazon Web Services], including HBO which relies on AWS Elemental for encoding, cloud-based video processing and delivery,” Flanagan wrote.

Quickplay was much more important as a supplier of video plumbing elements to AT&T while having to deal with satellite and multicast, Flanagan said. But now, with AT&T’s video strategy simplifying down to one OTT video business (HBO Max) and one pay TV offering (AT&T TV), the technology unit has outlived its usefulness at AT&T.

“Simply put, Quickplay has served out its time as the supplier of video plumbing elements which essentially enabled AT&T to get on with making key business decisions around video,” Flanagan wrote.

The companies didn’t reveal the financial terms for the deal. However, Flanagan estimated that AT&T paid between $300 million and $400 million for Quickplay when it bought the company in 2016, and that it got less than it paid in its deal with Firstlight and Highview.