AT&T and Verizon are plotting different strategies to win over video consumers in a rapidly evolving landscape.
Wall Street is getting its first glimpses of how those strategies are working in the companies’ Q3 earnings reports. AT&T, which acquired DirectTV to become the biggest pay-TV provider in the U.S., announces earnings Thursday.
On Tuesday, Verizon announced its earnings, and said its acquisition of AOL helped its bottom line with a 2 percent bump in revenue growth.
Longer term, Verizon hopes AOL will help it grow into mobile video. It recently launched a mobile-only streaming service Go90, targeting millennials.
“When we think about video, we think about mobile video,” said Jerry Rizzo, a Verizon spokesperson. “Seventy-five percent of millennials are using mobile to watch video.”
Rizzo said the millennial audience is very much at the forefront of the company’s plans for Go90.
“This is something that we feel resonates with that audience and definitely was built … with this mobile-first generation in mind.”
Meanwhile, AT&T has taken a bigger-is-better approach. CEO Randall Stephenson explained the rationale for buying DirectTV to analysts earlier this summer by recounting his conversation with a room full of millennials — who also were AT&T interns at the corporate offices in Dallas.
Stephenson said he asked them: “‘How many of you, because you’re living here in Dallas away from home, have a TV service?’ One hand went up out of a big group.”
Stephenson wasn’t surprised, but then he asked this question: “None of you guys watch football?”
He said many said they did, using passwords from their parents’ pay TV subscriptions to stream live TV on their mobile apps.
Stephenson’s point was that pay TV is not going anywhere. And AT&T is using its DirectTV merger to bundle services and sell family plans, both for parents and their millennial kids.
Brett Sappington at Parks Associates is one of the people keeping track of the changes in video consumption, and both Verizon and AT&T use his research.
“They’ve definitely taken two different directions,” he said.
“There are so many roles that [Verizon and AT&T] could play,” Sappington said. “I’m really curious to see what they will do and where they see the opportunity in the market.”
Correction: An earlier version of this story misspelled Brett Sappington’s first name. The text has been corrected.
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