April 24, 2014
AT&T announced a joint venture with The Chernin Group to commit $500 million to buy and launch Internet video services. Video content is foreign territory for AT&T, while Chernin’s only foothold is a majority stake in anime streaming service, Crunchyroll. Together, the two organizations have pledged to “acquire, invest in and launch over-the-top video services.” AT&T’s move into streaming services comes on the heels of similar projects by competitors such as Verizon and Dish Network.
Mike McGuire, a Gartner mobile marketing analyst, believes this is a smart business move on AT&T’s part, even though the company has little experience in content. “They would be in worse shape if they didn’t have an alternative offer,” he said to Wired. “Otherwise, they’d be feeding broadband to everyone else like Netflix. Better to have an alternative in place, than watch competitors take money out of your pocket.”
So far, tech and telecom staples have had an uneasy relationship with online services. Comcast, for example, has attempted to ban Netflix from its set-top boxes. The Supreme Court is hearing the major television networks’ case against Internet startup Aereo. HBO has had moderate success with its HBO Go service, but only viewers with a cable subscription including the premium cable channel can access their on-demand videos.
According to Wired, the key to AT&T’s success in the online video world is launching a stand-alone service. “To truly win consumers over, AT&T would have to avoid the temptation of releasing just another feature to prop up its own fiber optic cable service U-verse,” the tech publication reports.
AT&T and The Chernin Group, which was founded by former Fox Broadcasting Company head Peter Chernin, have previously partnered in an attempt to buy Hulu. Utimately, the owners of Hulu decided not to sell. The two organizations’ newest joint venture will focus instead on investing in over-the-top video services.
“Chernin and AT&T both indicated that the venture would try to leverage the wireless company’s nationwide data network,” notes CNNMoney. “Theoretically, AT&T could promote new video products to its wireless customers and make it part of the existing monthly bill.”