Recently AT&T announced their 1st quarter 2018 earnings and earnings went down slightly. Now AT&T has a new plan to replace revenues recently lost with the help of DIRECTV NOW.
“We continue to see challenges in the linear model and see opportunity in DirecTV Now,” AT&T CFO John Stephens said. “With the new platform, you’ll start seeing things like cloud DVR revenues, and pay-per-view revenue, both spots and movies. And eventually, you’ll see revenue driven from advertising and data insights. This transition will be challenging. And it will take time.”
Advertising on a live TV streaming service is very different and allows for far higher flexibility. Competitors like Sling TV have used this new flexibility to drive higher ad revenues. Now it looks like AT&T wants to do the same.
“Our [advanced advertising] base is around $350 million a quarter, and we grew it around 9%,” Stephens said. “The team is actually proving that this works already, with our existing inventory of ads we get from the content folks. … As we go through this year, we hope to add a lot more inventory through our umbrella of companies. Think about the overall digital advertising market in the U.S. is north of $60 billion. We’re not in that piece a significant player, but we believe we can be.”
Considering all the changes in the world of pay TV AT&T’s current revenue is impressive. Add in the fact that they are well positioned with a fast-growing DIRECTV NOW and things look bright over at AT&T. The question is what will happen in 5 years. For now no one knows what the future of pay TV looks like.
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