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Inside AT&T’s Expectations for Its New Streaming Service

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Dec. 4 2020, Updated 10:52 a.m. ET

Three service plans lined up

AT&T (T) is on track to launch a new video streaming service in about a year. The service will be based mostly on the WarnerMedia assets AT&T purchased for $85.4 billion in a transaction that closed in June.

At a recent analyst briefing, AT&T provided more details about its upcoming streaming service. It said the service would be available in three plans, where the entry-level plan would be a movies-only package, the second plan would offer original programming as well as blockbuster movies, and the third plan would include content from the first two plans plus content licensed from third parties.

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New video service to help inform future product direction

AT&T has specific expectations for its upcoming video service. It expects the service to complement WarnerMedia’s existing businesses, increase engagement around WarnerMedia’s content, and provide data and insights that could inform future products and the better monetization of its media content.

In addition to selling video subscriptions, AT&T also has its sights on the advertising market with its WarnerMedia properties. AT&T has created a new advertising unit called Xandr, which is leveraging insights from its customer relationships to drive higher returns for advertisers. Through Xandr, AT&T is battling Facebook (FB) and Google (GOOGL) for digital advertising dollars. According to eMarketer, Facebook and Google dominate the digital advertising market, as the two alone are on track to capture 57.7% of all digital ad spending in the United States in 2018.

Revenue rose 15.3%

AT&T’s WarnerMedia division generated $8.2 billion in revenue and $2.6 billion in operating profit in the third quarter. AT&T’s companywide revenue rose 15.3% YoY (year-over-year) to $45.7 billion in the third quarter compared to the YoY revenue rises of 7.5% at T-Mobile (TMUS), 6.4% at Sprint (S), and 2.8% at Verizon (VZ) in the same period.

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