Tech companies, on the other hand, generally are seen as innovators. And they're making things better. Comcast and AT&T already offer faster connections in areas where they compete with Google Fiber.
AT&T/Time Warner deal combines two powerhouses. AT&T is the nation's largest pay TV provider, the second-largest wireless provider, and the third-largest home Internet provider. Time Warner owns a dizzying array of media properties, including HBO, CNN, Warner Brothers, DC Comics, TBS, TNT, the Cartoon Network and broadcast rights to many live sporting events. But it does not own Time Warner Cable, a separate entity that the cable company Charter Communications bought earlier this year. The deal confirmed today follow's Comcast's merger with NBC in 2011 and Verizon's acquisition of AOL last year and planned acquisition of Yahoo this year. Today, YouTube is a massive digital platform and virtual network fueled by the people that is on par, if not bigger, than almost any TV or cable network. And by most accounts, Facebook Live and YouTube will continue to grow in importance as user-generated content on digital platforms become direct competitors to intuitionally generated content on traditional mediums — whether distributed through traditional means or online.
Direct to Consumer Subscription Services
Verizon, the nation’s largest mobile carrier, is also trying to keep up but via a different route. The telecom company is focused on building its digital platform with the acquisition of AOL and Yahoo, with their ad networks as big a lure as their new media content offerings, as it gears up to compete with Google and Facebook for digital advertising dominance.
TV ad spending decreased for the first time since 2009, and that decline is expected to continue over the next five years, according to estimates from eMarketer.
As more consumers cut the cord and ratings continue to fall for even the most promising live events -- like NFL games -- ad dollars are starting to jump from television to digital. Digital ad spending is expected to climb another 19% this year, according to eMarketer's estimate.
Advertising represents a significant portion of revenue for major media companies like Walt Disney (NYSE:DIS), Twenty-First Century Fox (NASDAQ:FOXA), Time Warner(NYSE:TWX.DL), CBS (NYSE:CBS), and Viacom (NASDAQ:VIA). Constrained by cord-cutting and decreasing ad spend, media companies are looking for new avenues of growth over the next few years. One promising solution is the direct-to-consumer model.
John Stankey, streaming services like Netflix and Hulu, there were hints that he wanted to pave a road to be more of a streaming giant considering the ever-changing landscape of media, television and how audiences consume content. Stankey said he wanted HBO to increase subscribers and the number of hours viewers watch shows as well as churn out more content — much like their streaming brethren. “We need hours a day,” he said. “It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.” HBO has 40 million subscribers stateside and 143 million worldwide, but Stankey insists that it wasn’t enough. He said that they have “to move beyond 35 to 40 percent penetration to have this become a much more common product.” HBO Plepler talked about HBO’s programming and their “bespoke culture” with prize shows like Big Little Lies and the critically acclaimed Barry and Insecure. Stankey wants to even further that at HBO and try something new. when it comes to content. Plepler asked if there would be more investment for the content to which Stankey said that there would be “stepped-up investment” adding that the company needed to make money. Plepler mentions that HBO was profitable and Stankey said that it’s “just not enough.” One thing that Stankey assured was job security for employees as a result of the merger. AT&T certainly has a strategic interest in competing with Netflix. As Stankey said at the town hall, “I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising.” Stankey wants to be able to deliver Warner Media content directly to AT&T telephones without going through any intermediaries, and he wants to be able to target ads along with that content without having to go through Google or Facebook. For that, he needs as much engagement as he can get; he doesn’t really care about the inherent quality of the content. HBO staffers and viewers are deeply connected to the network’s consistent quality, in a way that Netflix subscribers are not. HBO is a high-end brand: A new HBO series like Sharp Objects will always be received with the assumption that it’s a major cultural event, just because it’s coming from HBO. The same cannot be said of Netflix Originals because Netflix Originals need to appeal to a much broader range of audiences to make a dent in all that spending.
It makes sense for Stankey to want to compete with Netflix, but HBO is simply not the best platform to use to do so. HBO cares about nothing more than its reputation for quality: It will make Veep, but it would never make Fuller House. That obsession has turned it into one of the most valuable brands in the media world. HBO is worth much more than the $4 billion that Disney paid for Lucasfilm, plus the $4 billion Disney paid for Marvel, plus the $7.4 billion Disney paid for Pixar: The New Yorker estimated it was worth more than $30 billion in 2015, and it has surely increased in value since then.
The best move for AT&T is, then, is to take a page out of the Disney playbook and leverage the HBO brand by playing to its strengths without trying to turn it into something it isn’t. If Stankey wants to reach the kind of people who watch Adam Sandler films on Netflix, he should find a vehicle whose entire value proposition isn’t built on quality.
WarnerMedia’s TV portfolio is actually quite broad when you consider TNT, TBS, CNN, TruTV, TCM, Cartoon Network, Adult Swim, 50 percent of The CW, DC Entertainment, and more. HBO’s pitch to viewers — and to the creative community — is while competitors may have quantity, it offers quality. That ethos is reflected in everything from its hallmark Sunday-night lineup to the attention the network pays to its A-list creators.An increased budget could be good news for HBO, but the mandate to broaden its programming strategy might harm the network's quality brand.
Internet firms like Google and Facebook and Amazon and Netflix are the new media companies. They deliver enormous amounts of video online, posing a direct threat to old-school television and movie companies. But they also are becoming telecoms, threatening the likes of AT&T and Verizon.
>>>>>>>>>>
Hulu
Netflix
Sling tV
HBO Now
Amazon Prime Video
Youtube TV
Philo TV
Playstation Vue
Pluto TV
Fubo TV
DirectTV Now
Fubo TV
Playstation Vue
CBS All Access
ESPN
Showtime
Starz
Vudu
The best way to predict the future is to create it
Whatever funding Stankey is willing to commit, it can’t compete with Netflix: Unlike HBO, it doesn’t have to concern itself with posting a profit.
“HBO is a profitable company,” FX Networks CEO John Landgraf said earlier this year. “It has a very substantial programming budget, but it’s still within the realm of rationality. Netflix is a business that loses money. They spend $2 billion a year more than they take in. And so to me they’re actually dumping content onto the market at below cost in order to take market share and so that does bother me.”
According to the New York Times, Plepler admitted that Stankey convinced him that they need more content to be better. And given the fiercely competitive state of TV, there’s some truth to that.
That’s just a sample of the ways AT&T could push the $85-billion Time Warner Inc. acquisition to its more than 100 million wireless subscribers and 25 million pay-TV customers.
The Dallas-based phone company — which in June became the proud owner of the Warner Bros. movie and TV studio, HBO and Turner networks — says it’s on a mission to become a modern media company, though it has been short on specific plans so far.
In the coming weeks, John Stankey, the head of AT&T’s newly christened WarnerMedia, must figure out how to use its studio, networks and franchises such as “Harry Potter” and DC Comics to grow its business. But since the deal closed, AT&T has made bold moves by announcing a new streaming video service and buying AppNexus, a prominent advertising technology company, for a reported $1.6 billion. All together, the maneuvers show a legacy communications business trying to remake itself as a competitor to the likes of Google, Facebook, Netflix and Disney.
“I don't think we've ever seen this big of a company with so many moving parts trying to go in the same direction,” said Jeffrey Cole, director of the Center for the Digital Future at the USC Annenberg School for Communication and Journalism. “This is a key move by AT&T to become a major player.”
As it faces a saturated wireless market and declining satellite subscriptions from its DirecTV unit, AT&T hopes to entice mobile customers by streaming WarnerMedia content to people’s mobile devices, including smartphones. The goal is to take advantage of AT&T’s direct connections with millions of Americans and the user data previously unavailable to entertainment companies.
Warner Bros., HBO and Turner have been at a disadvantage to tech titans because they have limited information about who their viewers are and what they watch. Insights from AT&T mobile phone and DirecTV subscribers could help the entertainment companies decide what shows to greenlight. Marketers could use that information to better tailor commercial messages.
At a recent investor conference, AT&T Chief Executive Randall Stephenson emphasized the importance of the company adapting its entertainment business for a digital, direct-to-consumer era in which Netflix, Apple and Amazon are spending billions on movies and TV programming. “I believe the days when you can just create premium content and be a wholesaler of that content, those are over,” Stephenson said. “I don't believe that's a sustainable business model.”
The company’s recently announced “skinny bundle,” dubbed WatchTV, is a sign of its ambitions in streaming. The roughly 30-channel service, which features WarnerMedia outlets such as TBS, TCM and Cartoon Network, was launched in an effort to retake customers who have cut the cord or have never subscribed to a traditional pay-TV package.
AT&T charges $15 a month for WatchTV as a standalone offering, while offering it for free with AT&T unlimited data plans.
“This is about trying to put a fence around their customer base,” said Daniel Ives, a technology and media analyst at GBH Insights. “In a cord-cutting world, this is their answer.”
The company is also looking to better target advertising to individual households. That will let it reduce the number of ads that play during its programming, while charging marketers more money. A big part of its advertising strategy is to use AppNexus technology to build an advertising marketplace for digital video and television. Based on user data, WarnerMedia and AT&T could serve up ads for certain products to people — cosmetics for female viewers, for example.
“You have an ability to serve up highly targeted advertisements in a way that’s has never been done before, particularly with video content,” said media analyst Colby Synesael, of Cowen & Co.
AT&T’s advertising push is led by Brian Lesser, formerly of agency WPP. Lesser, in a recent CNBC interview in Cannes, France, said the company wants to try new methods of advertising that may be more effective than commercial interruptions. AT&T could avoid commercial breaks by prompting users to look up information about a product — such as a car or a dress — shown on screen, he said.
Lesser touted AT&T’s data-collection abilities, saying it’s the only company that knows when its customers are watching TV with a cellphone in their pocket.
“You can't possibly pay for all the content that's being produced now through a subscription,” Lesser said. “The world needs advertising more than ever, we just need to make it more relevant and we need to make it matter for consumers.”
Other media conglomerates have found ways of coordinating their disparate lines of business for mutual benefit. Walt Disney Co. is the most obvious example, funneling brands such as Pixar and Marvel through its TV networks, theme parks and merchandising units.
Comcast Corp.’s NBCUniversal has spent seven years perfecting its “Project Symphony” program, in which NBCUniversal Chief Executive Steve Burke and his team come up with a handful of projects each year to promote on all the various business units, including Comcast Cable. Ads for Comcast cable service have featured the characters of NBC’s hit show “This Is Us,” or from the movies “Minions” and “The Secret Life of Pets.”
NBCUniversal’s strategy has produced tangible benefits. Comcast heavily promoted the 2016 Rio Olympics to its cable subscribers and offered special features such as an on-screen home page to point viewers to the channel that featured their favorite sport. Comcast said the push resulted in viewership for the Olympics that summer increasing 27% in Comcast homes equipped with the special features compared with homes that lacked that access.
To make its own strategy work, AT&T will need to figure out how to mesh its buttoned-up corporate culture with that of the more freewheeling studio business. AT&T is known for finding cost efficiencies and instituting management hierarchies. The studios, in contrast, are used to spending lavishly on marketing, talent relationships and movie premieres. HBO, in particular, spares little expense to fly writers and filmmakers to meetings and events.
WarnerMedia CEO Stankey embarked on a series of staff hall meetings last month at HBO in New York, Warner Bros. in Burbank and Turner in Atlanta, where he sought to calm employees’ nerves and talked about new ways to attract talent. Producers and employees are still feeling trepidation about greater scrutiny of budgets and potential staff cuts, according to people in attendance.
AT&T will be under pressure to pare down the estimated $60 billion in debt it took on to complete the Time Warner acquisition. That prompted Moody’s to downgrade the company’s credit rating. BTIG analyst Walter Piecyk said in a recent report that AT&T has increased its fees for mobile customers, which could help the company whittle down its substantial debt load.
>>>>>>>>
Popular Streaming services
the best digital TV streaming services to try. Big changes are coming to your favorite streaming services.
Apple is reportedly planning to sell subscriptions to certain video services directly in the Apple TV app, instead of having users buy subscriptions from third parties. From there, Apple could then move to have streaming be entirely in-app as well. The tech giant is also slated to roll out original shows next March.
Meanwhile, several TV and music services are teaming up to offer a more comprehensive streaming experience. Hulu and Spotify, for instance, have teamed up to offer a per month bundled subscription for access to Hulu's Limited Commercials plan and Spotify Premium. Industry rivals Philo TV and Pandora are offering a similar deal: You can get three free months of Pandora Premium thrown into the mix with either of Philo TV's two main subscription plans.
In YouTube’s infancy, many television, movie and music companies were quite worried that users would either steal their copyrighted material and post it online for free or just shift their viewing behavior from TV to the internet. Those and other fears proved to be correct. We, the people, were about to be direct competitors to the likes of ABC, NBC and CBS.