Why AT&T’s divestment of WarnerMedia made me think of Nam June Paik – it’s deja vu all over again.

Nam June Paik is known as the father of video art, but he was also a man with a great turn of phrase.  He coined the term ‘electronic super highway’ well before the internet was a thing.  He was always imagining the ways technology might change human behaviour, and vice versa.  I had direct experience of this.  A mutual friend had recommended me to him as a writer.  He was preparing a live telecast called ‘Space Bridge’, related to the Seoul Olympics, and he wanted text to scroll across the screen at random moments during the event.  I asked him for a brief of what he wanted the text to say.  His answer, ironically left for me in the middle of the night as a voice mail message, was:

“Television is like telephone.  Doesn’t matter what you say.  Point is to make the call.”

As a brief for a writer, it was at once liberating and maddening.  At the time, I thought Nam June was riffing on Marshall McLuhan’s famous adage, ‘the medium is the message’.  But over the years, I’ve come to imagine that Nam June was instead channeling a board room level telephone executive, or knew something specific about the future of phone companies – they really don’t get the difference between the television and the telephone.  Or maybe they just don’t care.

I thought of all this when I read that AT&T was divesting itself of WarnerMedia, just three years after merging with it.  The move probably makes sense for both companies.  WarnerMedia and its new partner Discovery are much better matched, and have a complimentary portfolio of media assets to compete in the streaming wars.  AT&T have huge challenges ahead with the roll out of 5G and will need all their resources to compete for spectrum and build infrastructure for the data painted landscape where we will all soon reside.

The real question is why do telcos keep buying media content companies at all?  

In the mid nineties, I was hired by Tele-TV, a consortium of three regional American telephone companies to create interactive television using optical fibre instead of coaxial cable to reach American homes with video on demand, interactive shopping channels and all your regular broadcast tv.  Large press announcements were made, major Hollywood players were recruited, close to a billion dollars was spent, test neighbourhoods were wired, content was produced… and then the telcos shut it all down.

It was my first experience of the once a decade dance between the phone companies and the media business, imagining all those synergies that can maximise consumer relationships and shareholder value.

One thing that fascinated me was the confidence of the marketing folk at the telcos that consumers would prefer to subscribe to a phone company than a cable company for their tv content.  I was assured that was because ‘we provide much better customer service’.  I’m really not sure they understood that people don’t subscribe to content services for the reliability of the signal, but for the variety and desirability of the content.

But they were also certain that consumers would like ‘bundles’.  A new idea back then, we are all now familiar with bundling services, in which you get a discount for buying phone, broadband and tv in one discounted package from a single provider.  For the phone companies, though, a premium content service like HBO is insignificant next to the phone and data services they provide – it’s like the toy you get with the Happy Meal.  Or the bonus video on demand service you get with your one-day shipping fee from Amazon.

Here’s a link to a promo video Pacific Bell used for promotion of the VOD service we built back in 1996.  It looks old fashioned now, but then it was a genuine step change for TV.  25 years ago, EPGs were brand new.  Many of the features we designed and trialled then are now commonplace.  The idea that you could pause, rewind or bookmark a streaming video was a major leap forward for functionality and amazed consumers.  We also developed interactive advertising applications with car companies and major retailers. All these elements are standard  practice in the world of smart TVs and streaming services. Of course, my favourite innovation on the platform – a duo of animated characters (they were named Terrence and Virgil) to host the genre playlists on screen – is yet to be broadly adopted. But I’m confident that the invisible algorithms recommending shows to us behind the scenes today will one day soon be replaced by animated AIs.  Perhaps Terrence and Virgil will ride again!

The regional  US telcos lost interest in Tele-TV once new legislation allowed them to compete nationally for the emerging data services market.  The 1996 Telecommunications Act massively deregulated the phone and cable industries, freeing up the regional telcos to provide long distance and national ‘information services’.  At the time, it was expected that the bill would generate greater competition and reduce costs for the consumer – for example, with telco funded media like Tele-TV competing against cable providers.  But instead, the Act misread the role of the internet and set off a vast consolidation across the industry, with the booming business of data across phone lines requiring the full attention and investment of the phone companies.

AT&T’s decision to let go of WarnerMedia after spending the last three years merging with it feels remarkably familiar to me.  The stated reason that ‘uptake of services based on bundling with HBO+ has been lower than anticipated’, is a remarkably sad indictment of a strategy.

So much for content being king.  In the end, the phone company wins as long as we watch, buy, play via their pipes, landlines or 5G, and the data they carry, so AT&T don’t need to care about what we watch.  Nam June Paik was right. “Doesn’t matter what you say.  Just matters that you make the call.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s