Following in the footsteps of Netflix, Hulu, Amazon, and most recently Yahoo!, AT&T announced today that they will be dropping $500 million to get into the online video business. The telecom giant shrewdly will be partnering with media holding company The Chernin Group, the team responsible for funding Fox’s hit show New Girl.
It’s an interesting move into a crowded marketplace, but one of AT&T’s big advantages is that it has a pretty nice fallback plan if things don’t work out, considering their cell phones make up a huge percentage of the American market. The business world is one loaded with copycats, though, and Netflix’s huge profits seem to be inspiring everyone to get in on the streaming video scene.
The nice thing for AT&T is that they’re showing that they also have intelligence enough to partner with someone who actually knows the business. Whereas Yahoo! is relying solely on their own people to do everything (good luck with all that), The Chernin Group brings expertise in the management and distribution of these shows that, when combined with AT&T’s vast network infrastructure, gives this fledgling venture a chance at succeeding.
Like all business deals, this ultimately comes down to money. AT&T is sick of Netflix et al. raking in cash by using the AT&T network to deliver video content, with the added advantage of not having to pay anything for the right to use that network. By creating their own service, AT&T is making an attempt to cut out the middle man and make themselves a little more money, as if they need it.