'HULU, Netflix not valid substitutes to multi-channel TV'
President of Content at AT&T Dan York believes viewers will still chose to pay for their TV channel bundle. York, set to visit Israel for upcoming Cellcom Media conference, shares his thoughts with Calcalist on how to attract new customers
The gradual transition to IP television broadcasts is changing the face of television from linear broadcasts that enable viewing VOD content at the most, to something more innovative and interactive that can be viewed on our living room TV set, a PC and even a Smartphone. Content providers can learn about individual viewing preferences.
"The limit to the products that the industry can produce in this reality limitless", says president of content at AT&T Dan York.
York and his team are in charge of formulating and implementing the company's TV, internet and cellular strategies. He will be visiting Israel in two weeks to take part in a media conference held by Israeli mobile provider Cellcom.
During his visit, York hopes to find some original ideas related to content which his company might offer its US customers. Above all, York is interested in finding new ways in which content can be broadcasted on the various platforms his company operates.
Having been the first company to offer its customers smartphones, the company is all too familiar with the change the device created in the cellular world. Aside from offering a user-friendly touch screen, the iPhone introduced the App store in 2008, severing the historical ties between communication infrastructures and the services it provides.
Today, Israeli customers of one cellular provider have access to smartphone content of other cellular providers and even to content by Channel 2 and Channel 10 concessioners or by multi-channel networks such as HOT and YES.
In the past set top boxes were the sole TV content data port, but now the supply of media streamers which stream web content to televisions, the supply of web content services and the arrival of smart TVs which are directly connected to the web, indicate that the sweeping changes in the TV market are far from petering out and it will not be only content providers that will be hurt but multi-channel networks as well.
Telecom is threatening cable providers
York sweeps aside concerns over the smart TV threat: "Multi-channel providers, which enable viewing television content on PCs, laptops and mobile devices, will overtake content providers which will try to use smart TVs to offer viewers an alternative viewing experience."
Perhaps the reason for York's approach is the fact the multi-channel networks are themselves becoming providers of content that is working its way onto other platforms.
In 2006, AT&T launched U-Verse – an internet connection that offers hundreds of TV channels through an optic fiber network deployed by AT&T itself. Since last year, the service has been available to Microsoft's XBOX360 users in the US and Microsoft announced that in the near future, XBOX users will also be able to receive content by Comcast, Verizon and HBO.
In the third quarter of the year, some 176,000 subscribers joined AT&T television service customer base that constituted some 3.6 million subscribers in that quarter. The subscription rate was slower than the last quarter's in which some 218,000 subscribers joined the service; however, AT&T continues to benefit from customer migration from cable providers such as Comcast and Time Warner.
When AT&T began plotting its entry into the world of TV, it regarded the cable providers as its competitors and set out to undermine their hold on the market. Initiatives such as HULU and Netflix which offer on-demand internet streaming media, did not exist at the time.
Today, AT&T must stay ahead when it comes to its entrance and customer retention strategies – not only to convince its customers that it has the superior product which beats competitors' price but also to prevent its customer from terminating their subscription to "traditional" multi-channel television in favor of on-demand internet streaming media providers.
The "new American", to use the term coined in the Israel's recent social protest, are "cord cutters", meaning they are terminating their multichannel TV subscriptions and embracing free internet media offered by television networks on the web or alternatively, paying lower subscription rates for HULU, Netflix and similar providers.
"I don't think that products such as HULU and Netflix have been able to prove that they are adequate substitutes to centralized multichannel television which offers live broadcasts from a multitude of channels", York claims.
"There is no doubt that these initiatives have considerable bearing on the distribution of entertainment expenses in the US today, but the biggest blow by internet TV was sustained by on-demand providers such as HBO, Startz and Showtime which are undoubtedly threatened by the new trends with the new competition aiming at the heart of their long standing business model".
'Offer fresh content'
Currently, York dedicates his time to negotiating with the large content providers such as Fox, Disney and HBO whose content constitutes AT&T's TV channel mix but may also be accessed separately on the internet, cellular phones and tablet computers.
"We are facing sizable competition and our way of convincing customers to choose us is to introduce 'fresher' content (relating to the time that lapses between the premier of a movie and the permit for its online viewing, for example G.N.). Therefore, we have to be in constant negotiations with content providers in order to capitalize on these timeframes.
"Ultimately the goal is to make all content available on the three platforms – television, internet and cellular, enabling customers to choose when and where they consume content. The technology is already out there but turning this vision onto reality needs to go through the regulation of rights with content providers."
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