American telecom service provider AT&T and The Chernin Group announced their over $500 million venture to acquire, invest in and launch video services. The massive investment is seen as a response to the ongoing merger talks between Comcast and Time Warner Cable (TWC) and fiber-led Internet ambition of Google.
AT&T announced its video investment plan hours after Comcast shared its Q1 2014 revenue that rose 13.7 percent to $17.4 billion. Comcast Q1 income grew 16.3 percent to $3.56 billion. Out of this, Cable Communications revenue increased 5.3 percent.
AT&T, which has invested more than $119 billion in the United States over the last six years, said it wants to tap the online video and OTT video market.
Also read: Comcast Q1 2014 result: revenue up 13.7%, income increases 16.3%
Comcast, which is in talks for a $45 billion merger with TWC, said it added 124,000 cable customers in Q1 2014 and reached 26.8 million. It added 24,000 video customers in the first quarter of 2014. The company added 383,000 high-speed Internet customers. Internet revenue growth of 9 percent is the strongest growth rate in two years.
John Stankey, chief strategy officer, AT&T, said: “Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space.”
One-day before the video announcement, AT&T said it would expand its high speed Internet network to an additional 21 cities in the U.S. Internet network and online video venture will make AT&T a leader in the American broadcasting industry. It seems Internet search engine Google may not be the big rival for AT&T, but Comcast and others.
Also read: AT&T speeds up fiber network reach to 21 new areas, takes on Google
The Chernin Group, which invests in media businesses, brings assets and expertise to the venture, including contribution of its majority stake in Crunchyroll, a subscription video on demand service.
This alliance positions AT&T and The Chernin Group to take advantage of the rapid growth of online video and OTT video services. The strategic goal of this initiative will be to invest in advertising and subscription VOD channels as well as streaming services.
AT&T has over 110 million wireless subscribers and more than 16 million total broadband subscribers. Video makes difference to better customer experience. At present, Google and AT&T are competing in high speed Internet network roll outs. AT&T will benefit from video as it will compensate possible revenue loss from voice services.
Pix source: ledger-enquirer