Stankey is acutely aware that
he’s jumping into a market sud-
denly swarming with competitors
who know a lot about connect-
ing emotionally with consumers.
Disney will launch its Disney+
streaming service on Nov. 12, and
investors were so wowed by an
April 11 announcement that they
bid the stock up 12% the next day.
Apple, with its 1.4 billion devices
worldwide, will debut a stream-
ing service this fall. And Comcast,
with 31 million cable and broad-
band customers plus ownership of
NBC and Universal Studios, plans
to enter the streaming fray next
year. Netflix and Amazon, girding
for the onslaught, are well fortified
with tens of millions of streaming
customers each and prodigious
data on all of them.
How many subscription stream-
ing services can survive? “I think
it’s someplace between 10 and two,
and it’s probably on the lower side
of that scale,” Stankey says. “A good
outcome for a company like ours is
that there are four or five. I think
we’ve got a position where we can
be one of those.”
Whether that expectation is
realistic remains to be seen. “We
know that Netflix has the highest
satisfaction score of any U.S. TV
[streaming] service, with Amazon
and [Disney-controlled] Hulu
close behind, placing all three
in relatively secure positions,”
notes Toby Holleran of Ampere
Analysis. “This makes Disney+
most likely to displace the niche
streaming services.”
But in AT&T’s synergistic vision,
subscription revenue is just one
of the ways the company plans
to profit from its expensively
acquired content. An important
benefit, seemingly mundane,
is reducing churn in wireless
subscribers. Even a little churn—
AT&T’s was 1.67% last year—is
a big problem when you’ve got
153 million subscribers, says John
Donovan, who runs AT&T’s wire-
less, DirecTV, wired broadband,
and business services units—79%
of the company’s $171 billion in
2018 revenue (which included
Time Warner as of June 15, 2018).
“Ten basis points of churn is a bil-
lion dollars,” he says, and company
research shows that giving custom-
ers the right exclusive content
on their phones can slow churn
significantly. A customer might
say, “ ‘This thing’s awesome. My
spouse took me out shopping, and
I sat and watched football.’ It only
takes one impactful video viewing
per month for someone to say, ‘I
am never giving up AT&T on this
phone,’ ” Donovan says. And when
that happens, “you have 30 basis
points less churn—3 billion bucks.
It’s real money.”
Adding strength to the whole
proposition is AT&T’s unique ag-
gregate customer data trove and
its value in addressable advertising
over DirecTV and AT&T’s direct-
to-consumer streaming services;
ads can also be directed less pre-
cisely through the former Turner
AT&T MEDIA AND TELECOMMUNICATIONS FORTUNE 5 00
JOHN STANKEY : CEO, WarnerMedia
A GOOD OUTCOME FOR A COMPANY
LIKE OURS IS IF THERE ARE FOUR OR
FIVE [STREAMING SERVICES].
I THINK WE CAN BE ONE OF THOSE.”
SHOULDN’ T
THE
WORKPL ACE
BE A BET TER
PL ACE?
Every company is tackling diversity and inclusion in
different ways. Ellen McGirt’s newsletter follows their
progress and those who hold them accountable.
RACEAHEAD
fortune.comnewsletters
