• by Alex Weprin , February 1, 2018

AT&T is preparing to roll out the "next generation" of its DirecTV Now over-the-top streaming bundle, AT&T CEO Randall Stephenson told investors Wednesday.

DirecTV Now has also passed the 1.2 million subscriber mark, the executive added.

The next-gen platform will include user interface enhancements, as well as a cloud DVR for recording shows, and a third stream, allowing three people in one household to watch on separate screens at the same time. The update is scheduled to happen this spring.

DirecTV Now is among the larger players in an increasingly crowded field: the “skinny bundle” of cable and broadcast channels, meant to compete with traditional cable or satellite TV packages. DirecTV Now and Dish’s Sling TV each have more than one million subscribers, with newer entrants like Hulu Live TV and YouTubeTV looking to build marketshare of their own.

At the same time, DirecTV wants to use its OTT offering to revamp its traditional, linear video offering. 

"We are standing up a video product that we are convinced will give us growth in the video platform for the next few years, and that's our DirecTV Now,” Stephenson said on the call. “So, as traditional linear declines, we think DirecTV Now can offset that, and... our traditional linear video will be repurposed.”

That repurposing  of linear video will come in the form of new hardware, which Stephenson says “will actually drive cost structure of the traditional video product down so that you could preserve margins in the traditional linear video as you grow in the over-the-top applications and video services.”

As AT&T expands its OTT offerings, it is also building its advertising capabilities.

“Advertisers have made it really clear to us that they're looking for a trusted option in premium video advertising, looking for an alternative to the current digital ad duopoly that can bring advertisers scale and deliver results that are transparent and brand safe,” Stephenson said.

“Once [the merger with] Time Warner closes, we'll be well-positioned to be that alternative. We think the entire industry, advertisers, publishers, and consumers, are more than ready for this alternative," he added.

"And with Time Warner, we believe we'll have the right data, the right content and the right talent to build an automated advertising platform that can transform premium video and TV advertising.”