Hoping to woo cord-cutters, AT&T U-verse and Amazon Prime are offering a new, cheaper deal that gives customers fewer channels via the cable service, plus HBO and HBO Go.0
AT&T is making a play for cord nevers those Millennials who are used to getting their video entertainment online sans a cable subscription with a package of basic U-verse TV, broadband, HBO and Amazon Prime, all for $40.
The package includes local TV stations only, a non-DVR receiver, up to 45 Mbps Internet service, HBO on Demand, HBO Go and Amazon Prime.
The limited offer isn’t available everywhere and the price is good for only one year, after which the price pops up to better than $70, not including the $99 annual tab for Amazon Prime. It also has an early-termination fee of up to $180 and $99 installation.
DSL Reports points out that the latest deal is an iteration of other low-cost packages aimed at attracting non-subscribers, but notes that it’s the first time U-verse has included the Amazon Prime Instant Video piece.
AT&T isn’t alone in offering an attractively priced entry-level video package; Comcast, Time Warner Cable, Verizon and other operators are struggling to find the right formula to attract Millennials and to keep their services, especially broadband, in homes they already have as customers.
But, almost all of those packages have an expiration date, a point at which the deals become far less alluring.
Does Dish have a better idea? Maybe
Dish Network is taking a different tack.
An executive I spoke with at IBC earlier this month said that the satellite operator’s rumored $30 basic service is getting ready to launch and asserted that the deal isn’t being positioned as an introduction to a more expensive package; the $30 price for the package will stay at $30.
That doesn’t mean that Dish won’t look to increase revenues by up-selling to more expensive deals, but that isn’t the focus, he said.
Instead of introductory pricing that evaporates and creates churn Dish will look to sell additional packages of content in small bites that generate additional revenue.
Dish, in offering a low-priced option that it intends to keep cheap, is taking a stab at breaking the relentless cycle of subscriber defections to the next best deal available from the competition.
Subscriber acquisitions costs (SAC) the upfront costs of getting new subscribers has been a huge thorn in the sides of operators, who constantly fight to reduce churn.
Dish may have found a way to reduce that churn. The question, of course, is whether they can sell a low-cost package that makes sense financially.
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Is Showtime pondering a direct-to-consumer online service? The question might better be put as, What content owner isn’t?
At Thursday’s Nomura Digital Media Conference in New York, CBS COO Joseph Ianniello either foreshadowing the future or just rattling pay-TV operator’s cages — said there was nothing in its contracts with service providers that restricts us from doing something direct to consumer.
Mind you, Ianniello didn’t say the premium cable channel was planning to offer a Netflix-like service that would be more appealing to cord cutters and cord nevers, just that it could.
The lure, of course, is the 10 million U.S. broadband households that don’t subscribe to pay-TV, a number that is climbing as U.S. pay-TV penetration continues to drop, many of them from the attractive Millennial demographic.
His statement generated a lot of hubbub, as it should,
For years, industry wags have shot down the notion of a la carte as something broadcast and cable networks wouldn’t be willing to do because of the lucrative carriage fees they get from operators.
But Showtime isn’t the only content owner that apparently is looking to transition into a different business model, or at the very least to cover all the bases as the industry’s business model continues to evolve.
HBO continues its limited experiment offering an SVOD version of HBOGo to some Comcast Broadband only subscribers, even as rumors of an expanded over-the-top HBOGo surface following Time Warner’s rejection of 21st Century Fox’s takeover bid last month.
HBO CEO Richard Plepler in January also raised the specter of an online offering, telling Buzz Feed If the (pay-TV) arithmetic changes and the arithmetic makes sense in a different way, we are not going to be caught without the ability to pivot.
And, there’s been plenty of babble surrounding Dish Network’s intentions to roll out an online TV offering, possibly by the end of the year. That product, which CEO Charlie Ergen has championed, would include content from Disney properties including ESPN and ABC. (See related stories: Dish’s $30 OTT deal a loss leader that will bring in subs, draw Millennials; Dish-Disney deal keeps on giving, as Dish subs get more content; Dish talks with content owners could launch Internet TV service in 2014.)
Launching Showtime over the top might be a very successful play.
The network has a bunch of big titles, Homeland, Ray Donovan, and Masters of Sex, for example, as well as a catalog of older hit series.
Even with that programming clout, it’s only in less than 20% of U.S. households, Ianniello pointed out.
Is that the kind of thing a man with no OTT plans would mention?
Ianniello has always been a big fan of the dollars Showtime and CBS have brought in from OTT licensing revenue to Netflix, Hulu Plus, Amazon and others.
Will the future offer an even bigger stream of cash from delivering content online?
Count on it.
Follow me on Twitter @JimONeillMedia
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