Please ensure Javascript is enabled for purposes of website accessibility

Another AT&T Streaming Service May Be Doomed

By Stephen Lovely – Jul 5, 2020 at 12:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What's familiar and what's different about the likely demise of AT&T WatchTV.

AT&T (T 1.20%) is very much involved in streaming video. The company owns a wide range of over-the-top (OTT) services with a somewhat confusing array of brand names. There's HBO Now, the direct-to-consumer counterpart to HBO -- both are distinct from streaming app HBO Go, which is available to HBO TV subscribers. The company also offers HBO Max, a new premium streaming service. AT&T plans to streamline its HBO offerings by eliminating HBO Go and rebranding HBO Now, but it's clearly still complicated. And then there are the live TV services, most notably AT&T TV NOW (a skinny-bundle OTT counterpart to the internet protocol product AT&T TV) and AT&T WatchTV.

The company's luck with live-streaming television hasn't always been stellar. AT&T TV NOW (previously known as DIRECTV Now) has had more than its share of misfortune. And now it looks like AT&T WatchTV is on the ropes: The service will no longer be taking in new subscribers. It appears AT&T, which has already lost services like FilmStruck, DramaFever, and Super Deluxe (all in late 2018), is set to lose AT&T WatchTV as well.

A man watching a war movie on television

Image source: Getty Images

Watch out, TV 

WatchTV is what's called a "skinny bundle": a live TV streaming service that aims to trim the fat and offer a streamlined group of channels for less than what the legacy pay-TV giants charge (though AT&T is itself one of those giants). These OTT multichannel services feature familiar networks like Viacom's Comedy Central and MTV.

Most skinny bundles are multiplatform solutions. Dish's Sling TV, for example, works on platforms that include Roku, Amazon Fire TV, web browsers, and mobile operating systems such as Apple iOS. This typical approach is the one that AT&T TV NOW takes. In fact, that service recently made its way back onto Roku's platform.

But AT&T WatchTV is a little different as a super skinny bundle that's even leaner and cheaper than its competitors. And unlike many of its rivals, AT&T WatchTV has managed to avoid creeping up in size and price in recent years.

WatchTV can keep costs low, because it doesn't offer local channels, sports, and some news networks. This is the same approach used by Philo, a super-skinny service that costs $20 per month. Another difference between WatchTV and all of its major live TV multichannel competitors -- including Philo -- is that it's a mobile-only solution.

AT&T originally offered WatchTV to select mobile customers as a free service. It also sold subscriptions to those on other mobile networks for $15 per month. That's an extremely low price for a service like this. AT&T TV NOW, for example, starts at $55 per month and goes up in price from there.

Why WatchTV is no more

WatchTV met with reasonable reviews, but it always looked too good to be true. It provided access to dozens of channels for $15 a month -- or even gave them away for free to many customers -- in a deal that easily bested even its cheapest rivals. It likely helped that AT&T WatchTV is mobile-only, since that gave media companies less reason to fear they were cannibalizing their distribution over cable, satellite, and other services designed for TV screens.

Eventually, AT&T did end its free deal for mobile customers in Oct. 2019. Now, WatchTV is no longer accepting new subscribers even if they pay, a move that often precedes a service's demise, as was the case with Sony PlayStation Vue

This latest development fits the pattern of struggling skinny bundles, but there may be more to this story. What if WatchTV was never really built to last?

The WatchTV "conspiracy theory"

It's possible that AT&T never expected to get more than a few years out of WatchTV. After all, it was never likely to turn a profit -- skinny bundles virtually never do, at least in today's environment.

What it did do was help AT&T move unlimited mobile subscriptions. The service debuted in June 2018, not long after the Federal Communications Commission -- stacked with a Republican majority -- dismantled Obama-era net neutrality regulations in Dec. 2017.

The repeal signaled a bright future for ISPs and mobile providers hoping to prioritize certain types of data, throttle others, and tie streaming exclusives or promotions to network subscriptions. All of these actions are permitted under current net neutrality rules (or lack thereof) in the U.S.

WatchTV also came at a time when AT&T was trying to win approval for a major media merger. Its acquisition of Time Warner went through in part because the companies were able to convince initially skeptical regulators that AT&T's stronger grip on legacy pay TV would not kill affordable streaming alternatives. AT&T strengthened this position by hinting that the company would seek to bolster, not beat, the streaming competition. In this context, the arrival of the ultra-cheap WatchTV could be seen as a great sign for a bright future of affordable consumer choices.

To say that AT&T never expected WatchTV to last might be too cynical, but it's impossible to deny that the timing worked out well for the pay-TV giant.

Turning off for good

For consumers, the difference is somewhat academic. Whatever the reason, the cheapest of all skinny bundles is on its way out. With the exception of Philo, which is only moderately pricier, skinny bundle alternatives like Sling TV and Alphabet's YouTube TV are far larger and pricier than WatchTV ever was.

The trend with skinny bundles appears to be that they either die out or come to resemble cable bundles -- or both. AT&T TV NOW has largely morphed into a cable-like behemoth, but WatchTV appears to be going the other direction. The service probably won't be around much longer.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stephen Lovely owns shares of Amazon, Apple, and AT&T. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Roku and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
$16.09 (1.20%) $0.19
Alphabet Inc. Stock Quote
Alphabet Inc.
$101.64 (3.04%) $3.00
Apple Inc. Stock Quote
Apple Inc.
$146.10 (2.56%) $3.65, Inc. Stock Quote, Inc.
$121.09 (4.50%) $5.21
Paramount Global Stock Quote
Paramount Global
$20.07 (2.29%) $0.45
DISH Network Corporation Stock Quote
DISH Network Corporation
$15.40 (4.12%) $0.61
Sony Corporation Stock Quote
Sony Corporation
$68.24 (3.14%) $2.08
Alphabet Inc. Stock Quote
Alphabet Inc.
$102.41 (3.13%) $3.11
Roku Stock Quote
$62.40 (4.77%) $2.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.