AT&T is planning to release a DirecTV-branded streaming video service later this year, but according to Bloomberg, it also expects for that to become its primary video platform soon. Earlier this week, its CEO Randall Stephenson confirmed the DirecTV Now launch is still on track for 2016, calling it an exclusively over the top product, with no truck roll, no set-top box or anything else. The report claims that at launch it will be limited to two simultaneous streams, with pricing similar to the $40 – $55 per month PlayStation Vue service.
Sure. An MVPD like product. So I think 100 premium channels in a purely over-the-top platform with a completely different cost structure. I mean, this is a very unique cost structure and a very unique platform. We have built this from the ground up. We spent the last year plus developing this platform. And it starts with how does the customer subscribe to the service?
They download an app on their smartphone, their smart TV or their tablet, they subscribe purely digitally, they select their content digitally, they interact with us digitally, the billing is purely an online billing arrangement. This is a very, very low cost customer acquisition product. It is a very low cost to install product meaning the customer has just done it once they downloaded the app. There are no set-top boxes, they are no truck rolls involved in this.
So we are kind of re-platformed all of the cost for this product, and it’s a very, I mean, nominal incremental cost to provision this. So to your point, we had to acquire content rights, and being the largest scale TV provider in the U.S. gave us a lot of opportunity to get a best-in-class cost structure around this content. We’ve been very aggressive about this over the last year.
And we’ve been doing what I would consider some win-win arrangements with the content providers. The content providers, I believe are [indiscernible] referred to it that he is happy with the arrangement we struck. And so you put the different cost structure, kind of a unique position content cost together. And we can’t put together a product that is — I’m going to call it thinner, not thin margins, but thinner than what we’re accustom to. But I’m always willing to take thinner margins, when there is low capital intensity in the product.
So we think we’re going to be able to meet a price point, that’s very, very aggressive in the marketplace. And keep in mind, it’s a product that is integrated with our wireless service. And it’s also integrated with our broadband our home broadband service.
And so to the extent, that is driving additional penetration or further penetration, wireless or driving churn down in wireless, the lifetime value of a customer with this kind of product is actually quite attractive and very positive. So that’s why we’re so excited about it.
While Vue and Sling TV are natural competition, other providers like Comcast and Time Warner Cable have launched small tests in offering internet video. If AT&T pushes to replace its satellite TV acquisition and U-verse TV service with a purely over-the-top streaming service, it could be the first major provider to go that route. The projected window is within three to five years, so one way or another, by 2020 you can probably expect easier access to NFL Sunday Ticket.