I anticipate the deaths of U-verse TV (for new subs) and AT&T TV Now in the first half of 2020, as AT&T focuses on AT&T TV and HBO Max within its broadband markets.
AT&T first launched AT&T TV, the streaming version of its premium pay TV service, in 10 markets in August 2019, and added four more markets in November. The company plans to expand the product nationwide next month. In the areas where AT&T TV is available today, the company has reduced marketing efforts for its legacy TV products, while increasing spend to promote AT&T TV. The company’s shifting marketing investments reflect AT&T’s shifting video and broadband bundling strategies.
Meanwhile, as DirecTV becomes limited to the markets where AT&T does not offer broadband, the provider will feature inventive bundling offers that pair DirecTV and wireless.
According to Comperemedia and Pathmatics, before AT&T launched AT&T TV, nearly all the company’s Facebook ads for TV products featured DirecTV (less than 1% of its Facebook ad spend went to U-verse TV ads). The story has changed drastically in the AT&T TV pilot markets since the August launch; each month, spending on DirecTV ads has decreased as AT&T invested more heavily into promoting AT&T TV on Facebook. By the end of November, less than 30% of AT&T’s Facebook spend for TV products went to DirecTV in these pilot markets, while the vast majority featured AT&T TV.
A very similar story played out in direct mail. Comperemedia found that in the AT&T TV pilot markets, prior to August, around 20% of TV mailers promoted U-verse TV and 80% featured DirecTV, whereas in November, more than 70% of TV promotions in these markets featured AT&T TV. The shifts in these channels demonstrate how the provider is reducing marketing support for its legacy TV products in the AT&T TV pilot markets, in favor of its new pay TV service. AT&T will likely continue to reduce its ad spend on U-verse TV and DirecTV as it expands the AT&T TV footprint this year. AT&T TV will hammer the final nail in the U-verse TV coffin in 2020, and by mid-year DirecTV acquisition efforts will die out completely within AT&T broadband markets.
How will AT&T differentiate its AT&T TV and AT&T TV Now products as these shifts occur (and as it launches HBO Max) in the first half of 2020? In June 2019, comments from WarnerMedia CEO and AT&T COO John Stankey to CNBC suggested that AT&T would likely combine AT&T TV Now (then “DirecTV Now”) with HBO Max. However, it seems far more likely that AT&T TV will subsume AT&T TV Now, and I expect this to happen when AT&T TV launches nationwide in February, or shortly thereafter. According Pathmatics, AT&T’s last big digital marketing push for DirecTV Now occurred in April 2019, and its spending on DirecTV Now/AT&T TV Now has remained below $100K/month since July. AT&T’s online marketing spend for AT&T TV Now dwindled to almost nothing in December.
What does AT&T’s TV marketing look like in 2020?
With AT&T TV’s nationwide launch in February, I would expect a brand-new awareness marketing campaign for the service, with heavy spending in TV, print, banner and online video ads, as well as heavy cross-sell to existing AT&T internet customers and wireless subs in applicable areas. Key messages already observed in AT&T TV marketing, such as easy set-up, voice control, and all streaming content in one place will remain central in the new campaign.
AT&T will continue to invest in DirecTV outside of its broadband markets (AT&T Communications CEO Jeffery McElfresh said as much at an industry event in December). What’s exciting about this, from a consumer marketing standpoint, is the potential for innovative wireless/pay TV bundling approaches. Consumers who choose an unlimited wireless plan along with DirecTV are likely to receive special discounts, freebies or other incentives.
Many of us have anticipated the end of U-verse TV for several years, so it feels overdue that AT&T will finally stop taking new U-verse TV subs in 2020. But along with this change, expect to see a new wave of customer communications from AT&T incentivizing its existing U-verse TV customers to switch to AT&T TV. We may also start to see a push to move DirecTV customers in AT&T broadband markets over to AT&T TV. So far, pricing for the TV products, as well as TV and Internet bundles, has been largely consistent across U-verse TV, AT&T TV and DirecTV, so the move from a legacy product to AT&T TV has the potential to be pretty seamless for the customer.
AT&T’s wild card is still HBO Max, expected to launch in May 2020. It remains to be seen just how AT&T will bundle and/or integrate this product with its existing services, although AT&T has said the service will be free to subscribers of certain premium AT&T products. By the end of 2020, however, it seems safe to say that AT&T will have streamlined a confusing web of video products into just three: AT&T TV, HBO Max, and DirecTV.
Emily Groch is Comperemedia’s Director of Insights, Telecommunications. She pairs her deep knowledge of marketing within the telecommunications industry with Mintel’s consumer research, trends, and competitive marketing intelligence to build timely, meaningful stories for Mintel and Comperemedia telecom clients. Emily travels throughout the US and Canada to present industry marketing trends and insights to major TV, Internet, and wireless service providers, and their advertising agencies.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceVideo staff. They do not represent the opinions of FierceVideo.