AT&T is getting ready to announce a new WarnerMedia streaming service later this fall. (The exact launch date is unknown, but AT&T said they plan to officially announce it this fall.) Reports are out that the service will cost $16 to $17 a month and will include HBO, Cinemax, and on-demand WarnerMedia content.

It has also been reported that AT&T wants to take a page out of Hulu’s playbook by offering a live TV add-on combining DIRECTV NOW with the new AT&T WarnerMedia streaming service.

Early reactions have been extremely negative. With a starting price of $16 a month and AT&T’s history of subpar streaming services, cord cutters have been very skeptical at best. If you look at this service as a streaming service targeting cord cutters you will likely be correct. But if you look at it as a service targeting HBO subscribers you would likely be wrong.

From the sounds of it, AT&T plans to use HBO’s 140 million subscribers to grow the service. It has been reported that AT&T plans to include HBO and Cinemax in the new service. To make the deal worth a few more dollars AT&T will reportedly include a huge amount of WarnerMedia content and original programs. Much like how ESPN is not targeting cord cutters with ESPN+ but going after hardcore sports fans who stream or pay for cable TV.

If AT&T can get just 10% of HBO subscribers to upgrade to add the WarnerMedia content that would give AT&T 14 million subscribers. It is also very possible that AT&T would make this new service mandatory for HBO NOW subscribers. Want HBO NOW? You may be asked to pay an extra $1 or $2 and subscribe to WarnerMedia’s new service.

So why is AT&T’s new cord cutting service a good tool for cord cutting? If you already want HBO NOW the extra $2 would add a huge catalog of content not currently available with your $15 HBO NOW subscription. If AT&T does this correctly, they could have a great streaming service with a massive catalog of content at what may seem like a high starting price but in the end offering a lot for what you pay for.

The downside here is this all assumes AT&T will, in short, not screw this up. DIRECTV NOW has left a very negative impression of AT&T on many cord cutters. For years AT&T has been making promises about DIRECTV NOW like the new DVR add-on that never ended up launching. AT&T also has a history of starting off strong with a streaming service only to walk away and let it sit there.

We will have to wait and see if AT&T can take full advantage of the opportunity they have or if they will waste it like they have done with DIRECTV NOW and so many others.

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