AT&T/ Chernin Group Deal: Another Take on OTT Video Monetization

[Commentary] AT&T is trying a new approach toward the over-the-top video opportunity, announcing that it has created a joint venture with media company The Chernin Group to focus on over the top (OTT) video.

The companies said they would jointly invest $500 million in the venture with the goal of “investing in advertising and subscription VOD channels as well as streaming services.” OTT is both an opportunity for and a threat to the nation’s largest pay TV providers -- including AT&T, Verizon and cable companies such as Comcast and Time Warner Cable.

OTT video offerings such as Netflix and Amazon Prime threaten the pay TV providers’ subscription and VOD revenues. But Netflix and Amazon Prime don’t have their own networks -- and those networks could become increasingly important as TV Everywhere gains in popularity, giving consumers the ability to watch video on a variety of devices. And as that happens, companies such as AT&T and Verizon that have mobile as well as landline broadband networks may have an edge.

Based on the press release announcing the AT&T/ Chernin Group venture, the venture partners appear set on capitalizing on that edge.