AT&T Investing in, Lauching Over-the-Top Video Services

Aiming to compete with the likes of Netflix and Hulu, AT&T and The Chernin Group plan to acquire and launch over-the-top (OTT) video services.

AT&T has grabbed the hand of a powerful entertainment industry partner, The Chernin Group (TCG), in announcing plans to invest in and launch over-the-top (OTT) video services. In an April 22 announcement, the pair said they have committed $500 million in funding to the venture.

AT&T, in its statement, said the goal of the initiative will be to "invest in advertising and subscription video on demand (VOD) channels as well as streaming services."

Popular OTT video services already running over wireless networks to AT&T-supported handsets include Netflix, Hulu and Amazon's VOD.

"AT&T and The Chernin Group are combining our skill sets to address the growing consumer demand for accessing content how and when they want it," said AT&T Chief Strategy Officer John Stankey.

"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," Stankey continued, "creates the opportunity for us to develop a compelling offering in the OTT space."

TCG owns a majority share of CA Media, which "builds, manages and operates media, entertainment and technology businesses across Asia," said the statement. It also has investments in companies such as Pandora, Flipboard and Crunchyroll—a VOD service that specializes in anime. Peter Chernin, founder of TCG, was formerly the president of Fox.

Chernin, in the statement, called online video a "critical part" of TCG's strategy, and said that the deal underscores the pair's "strategic commitment" to behave as operators, investors and programmers.

"Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles and connected TVs on mobile and broadband networks," Chernin added. "AT&T's massive reach on those platforms across mobile and broadband, and their commitment to the online video space, make them the perfect fit for this venture with us."

As the smartphone market saturates and competition grows more intense, AT&T's massive reach expands still further. The company has invested in all areas of consumers' mobile lives—and even areas where consumers once didn't expect to be connected.

In April 2013, AT&T entered the home security market with the introduction of Digital Life, a service that enables users to lock or unlock doors and view feeds from cameras within the house or on a property via mobile devices. Among other features, users can receive alerts when motion is detected, or program the house to anticipate a family's arrival home, by turning on certain lights, or the coffee maker or heater, at designated times.

AT&T has also made inroads into the connected-car market, announcing deals with automakers, including Volvo, to wirelessly connect vehicles and turn them into hotspots; launching Drive Studio, a garage-meets-developer lab for the connected car ecosystem; and introducing AT&T Drive, a mobile platform for developers.

The wireless carrier has also been putting down high-speed roots. Last year, it deployed a fiber Internet broadband network in Austin, Texas—where Google now also offers fiber services—and on April 21, it offered a road map for the next 100 cities, where it hopes to deploy its U-Verse with GigaPower service.

AT&T and TCG didn't share what entertainment properties they plan to buy, whether they'll develop original content, what the new venture will be called or when it will be available. The financial terms of the agreement were also not disclosed.

AT&T will announce its quarterly earnings results this evening.

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