AT&T To Acquire QuickPlay, Boost Streaming Video Services

U.S. telecom behemoth AT&T, Inc. (NYSE:T) recently announced a deal to acquire QuickPlay Media Inc., a leading digital streaming distribution platform, from Chicago-based private equity firm Madison Dearborn Partners. Notably, the deal bolsters AT&T’s video service capabilities and is expected to close in mid-2016. The financial terms of the transaction, however, have been kept under wraps.

Rationale Behind

We note that AT&T has been relying on QuickPlay to deliver video for its U-verse TV Everywhere offering and will now be using the QuickPlay platform to deliver content for the three new DIRECTV (NASDAQ:DTV) streaming video packs it plans to introduce by year-end.

Interestingly, in March, the company announced plans to offer a version of its DIRECTV satellite TV service through Internet which would not require customers to have a satellite dish, set-top box or annual contract. The new service will lend users the ability to access and stream DIRECTV video services over a wired or wireless Internet connection from any provider and via any device.

The company will be offering three affordable video plans in order to appeal to all types of viewers, ranging from those who want the full package to a streamlined bundle.

With DIRECTV Now, the company plans to offer a full range of live channels and on-demand shows. DIRECTV Mobile will be providing a package of premium and made-for-the-Web video particularly intended for smartphone users. Meanwhile, DIRECTV Preview is a free, ad-supported video service designed to attract teens and millennials.

Notably, with the deal in place, AT&T aims to retain QuickPlay’s 350-plus employees and contractors and enhance QuickPlay's managed platform services.

Post acquisition, QuickPlay will continue to serve other customers, such as Verizon Communications Inc. (NYSE:VZ) , Rogers Communications Inc. (NYSE:RCI) , Bell Canada – a subsidiary of BCE Inc. (TO:BCE) -- and HOOQ, an Asian joint venture between Sony Pictures, Warner Brothers, and Singtel Group.

Bottom Line

Notably, as the U.S. market matures and customer growth slows, video distribution is warming up as one of the next battlegrounds for the telecom industry.

The acquisition of QuickPlay will further boost AT&T’s attempts to reach out to cord cutters who are ditching traditional pay-TV packages, by providing increased value and flexibility via its Web video options.

AT&T currently has a Zacks Rank #3 (Hold).

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