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Pay-TV Operators Eye Mobile Video To Reduce Subscriber Costs
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AT&T officials offered some pretty eye-popping numbers this week on the impact of the DirecTV acquisition on the bottom line. Speaking at the Goldman Sachs Communicopia conference in New York AT&T CFO John Stephens said DirecTV pays $17 a month less per subscriber in content costs “on an apples-to-apples basis” compared to what AT&T has been paying per U-Verse subscriber.
AT&T is now working to “bring those prices in line” by moving everything to “the most efficient contract pricing in the house,” which is the DirecTV price. “So with 6 million U-Verse subscribers you can get your head around about $100 million a month,” in savings, he said, or $1.2 billion per year. “That’s sort of the easy math on how you can conceptualize the scale” of the savings.
The math could soon get even easier for AT&T. “Right now we have 75 million smartphones and tablets and 50 million broadband locations that we don’t sell video to today,” Stephens said. “So we have 125 million locations we can take to the content team and say, let’s work together to sell something. It doesn’t have to be an adversarial situation, it’s here’s your growth and we built this integrated carrier model to take advantage of that.”
It’s going to be an adversarial situation anyway, of course. That’s just the nature of the beast. But Stephens’ comments are a useful window into how operators are thinking about mobile video. The marginal costs of adding a new mobile video subscriber should be far lower than adding a new fixed-line subscriber, because there’s no truck roll involved and the consumer has already purchased the necessary equipment.
Equally important, mobile video, for the incumbent operators able to take advantage of it, could provide an expanded base of potential subscribers and drive down per-subscriber content costs.
