WarnerMedia Rolls Out Three-Tier Streaming Offering

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AT&T CEO Randall Stephenson

"Those customers that are more price-sensitive, and want smaller packages, we now have streaming packages," AT&T CEO Randall Stephenson told analysts.

WarnerMedia on Thursday said its upcoming direct-to-consumer streaming service will launch in beta form in the fourth quarter of 2019, with three tiers of service, including a starter movie package.

AT&T CEO Randall Stephenson said during an analyst day presentation that the phone giant can no longer rely solely on its traditional cable and satellite TV businesses to drive its entertainment content to consumers.

"You must develop a direct relationship with your viewers. And if you’re a communications company, you can no longer rely exclusively on oversized bundles of content," said the exec.

The result is a three-tier offering of streaming packages. The entry-level bundle to come from WarnerMedia will offer a starter movie package.

Next up is a premium service with original programming and blockbuster movies. A third service bundles content from the first two streaming packages, with library content from WarnerMedia and eventually more content licensed from third parties.

WarnerMedia CEO John Stankey told analysts that, ideally, TV viewers opting for digital video consumption and spending should eventually want all three streaming package options to come from his company. "We want the customer to want all three tiers, and work their way in at an affordable price point,” he said.

The upcoming WarnerMedia streaming service will put the company, recently acquired by AT&T, into direct competition for streaming audiences alongside Disney, which is currently prepping a family-friendly subscription video service that it plans to bundle with other streaming products ESPN+ and Hulu.

To prepare for the rollout of its streaming service, WarnerMedia has been closing down non-core subscription services like FilmStruck; DramaFever, which specialized in Korean dramas; and other international programming, while Turner Entertainment shut down its Super Deluxe digital studio soon after Turner owner Time Warner completed its sale to AT&T.

Stankey on Thursday told analysts that the recent closures were done to "ensure we could put out the bulk of our library with scale," as his company gets set to unveil its three-tier streaming offering.

WatchTV, AT&T's recently launched $15-per-month skinny OTT service, already features more than 30 channels, including the recently acquired CNN, TNT and TBS services.

The telecom giant's new direct-to-consumer offerings will also compete with Netflix, Sling TV, CBS All Access and other streamers, and with rival cable providers like Comcast and Charter Communications.