AT&T takes on Netflix, Hulu with own VOD service

LAS VEGAS--AT&T today unveiled a new video-on-demand service for its U-Verse TV offering amid the rising threat of companies such as Netflix.

As more consumers consider dropping their cable TV in lieu of Web-based alternatives, including Netflix, Hulu, and Amazon Prime, AT&T said today that it is offering the U-Verse Screen Pack for $5 a month, available only to its U-Verse customers. It will allow users to access a library of 1,500 movies from their TV, computer, or wireless devices.

Existing U-Verse TV customers will get a free preview of Screen Pack between January 7 and January 13. On smartphones and tablets, the movies are available via the U-Verse app.

Screen Pack represents a defensive move to keep subscribers from leaving the service by offering something similar. The emergence of over-the-top video services, called so because they are delivered via the Internet on top of traditional services, threatens pay TV because consumers can drop that portion of the service and just pay for Internet access. The pay-TV industry has had mixed views about the impact.

"It's clear (AT&T) is trying to take on those services," said Mike Jude, an analyst at Statecast, a division of Frost & Sullivan.

AT&T, for its part, doesn't consider Screen Pack to be its answer to Netflix or other services, but rather an expansion of its existing offering.

"It's just one way to deepen the content opportunities that a customer has," said Jeff Weber, president of content and advertising sales for AT&T's home business.

Indeed, the service doesn't compare to the breadth of movies and shows available on Netflix, Amazon Prime, or Hulu+. Netflix, for instance, is estimated to have 50,000 programs at any given time. AT&T said it will continue to add to the library. Still, it offers an option to existing customers that's relatively easy, potentially deterring them from dropping AT&T as a TV provider.

"It plugs a hole in the U-Verse service offering," Jude said. "For the average consumer, if I can get the same kind of content for $5, it kind of makes sense. It's less of a hassle."

The service, however, isn't going so far as offering its own over-the-top service, as rival Verizon is doing with its partnership with Redbox. Verizon executives have long acknowledged the threat of Internet video, and the company has been more willing to move in that direction itself.

Weber declined to comment on the Verizon Redbox initiative, but said AT&T has no plans to go down that route.

"We'll use over-the-top as a way to enhance, but there isn't a different thing we're looking at. This is the right approach for us," Weber said.

As part of the introduction of Screen Pack, AT&T is revamping its U-Verse On Demand storefront. The company boasts that the storefront will be able to dynamically learn customer preferences and create better recommendations.

The company also unveiled two U-Verse related apps. The first is Pix & Flix, which allows customers to share photos from their smartphones to the TV screen, while the second is Twonky Beam, which lets customers send video on their phones to the TV screen through the U-Verse TV receiver.

While AT&T has focused more on the mobile side of its business over the last few years, the wired business still contributes a healthy chunk of revenue to the company. In the third quarter, AT&T added 198,000 TV subscribers to bring its total to 4.3 million. U-Verse was introduced partly to prevent customers from switching to cable providers or dropping their landline service in favor of just a cell phone.

AT&T's event isn't exactly part of the Consumer Electronics Show festivities. The company's event, which takes place away from the Las Vegas Convention Center and the press conference area at Mandalay Bay, is held primarily for its developer community.

As a result, the company unveiled its Call Management application programming interface to developers looking to create more advanced communications services using customers' existing AT&T cell phone numbers.

AT&T also launched its Alpha API program, which will work with developers to bring out other APIs.