The recent acquisition of DirecTV (DTV) by AT&T (T) may be a game changer. It has the potential to completely redefine the entire Pay TV space. It turns the pressure up on every competitor including Comcast (CMCSA) , Time Warner Cable (TWC) , Charter (CHTR) , Cox, Verizon FiOS (VZ) , CenturyLink Prism (CTL) , and Dish Network (DISH) . So what can we expect going forward?
I am an industry analyst who follows the communications space including wireless, telephone, Internet and of course Pay TV including IPTV and Cable Television.
I am also a customer of AT&T, Comcast, and Time Warner Cable and can see first hand the enormous threat and opportunity AT&T DirecTV represents.
AT&T DirecTV Could Transform Cable TV
The cable television world has to decide the best competitive strategy. Will they try and knock AT&T DirecTV down, or will they raise their own game? That’s the important question going forward. Either way, the game is changing.
Looking backwards, I would say every cable television company would be worried about protecting their turf and would therefore try and knock AT&T DirecTV down. Looking forward though, I would hope cable TV would see the writing on the wall and raise their game. That’s their only chance to remain competitive.
Cable TV is Changing
Cable television is no longer the rapidly growing industry it once was. It is losing market share for the first time ever to new competitors like AT&T Uverse, Verizon FiOS, and CenturyLink Prism.
AT&T and Verizon blended their IPTV service with their wireless networks and created new offerings which customers love. Today viewers watch television on their smartphones, tablets, and laptops from any place in the United States.
This competitive pressure forced the cable television industry to acquire wireless spectrum and compete. The only problem is they failed. They failed at offering wireless phones, and they sold their wireless spectrum to Verizon before they realized they needed it to compete against the new way we watch television.
So cable TV companies struck a deal with Verizon Wireless, which operates as the wireless carrier for companies like Comcast, Time Warner Cable, Charter, and Cox. This is good, but is it enough?
As a reseller, the cable television industry cannot be innovative because they don’t own the wireless network.
AT&T Reinvents DirecTV
That’s where this AT&T DirecTV comes into play. The same company, AT&T, owns both DirecTV and AT&T Mobility. This will allow DirecTV to start offering wireless connectivity to their customers. That was the first announcement made by AT&T after the merger. That’s a huge first step. As time goes by, I expect to see many innovations from this partnership as well.
Dish Network Alone Without Wireless
Dish Network has plenty of wireless spectrum, but they simply can’t find a wireless carrier to acquire or even to partner with yet. So Dish is the only television company without a wireless option.
That’s something that must be remedied, quickly, or it may impact growth. We have seen quite a bit of activity, but nothing ever happens. Not yet anyway.
Watching DirecTV Wirelessly
First thing AT&T did after acquiring DirecTV was to announce users could now watch TV wirelessly. This will make all the difference in the world to DirecTV users. And that is only the first step. I believe this will make DirecTV much more attractive in a competitive marketplace.
I fully expect we will see much more in the way of innovative offerings going forward. I expect to see them blend the satellite television, U-verse IPTV, wireless, telephone, and internet. I expect to see new ideas and innovations coming sooner rather than later. So stay tuned.
AT&T is Innovative and Competitive
AT&T has always been an aggressive competitor, transforming the spaces they are in, and I fully expect the same thing will happen here.
Just like they were the first and most aggressive to offer many things like smartphones and had the exclusive on the Apple (AAPL) iPhone for years. They offer U-verse TV and GigaPower ultra high speed Internet and much more as well helping to transform different industries.
That’s the kind of moves I expect to see coming from AT&T. I think we are about to see them turn up the heat and transform the entire pay TV space. However, I also expect to see integration. So you will not only be able to buy separate services, but these services will work together in new ways.
Innovation will capture the imagination of the marketplace and win business. That will create plenty of threats to existing leaders and inspire challenges from the established players. Some ideas will be home runs and others will be strikeouts, but either way, we will see plenty of innovation transforming the pay TV space going forward.
Keep your eyes open for how Pay TV will blend with wireless and the internet going forward. These formerly separate sectors are blending and integrating. Tomorrow, we won’t be watching TV the same way we did yesterday. As the space changes, new leaders may replace old leaders. The transformation has begun.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer