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AT&T is building its own video service after it failed to buy Hulu

AT&T is building its own video service after it failed to buy Hulu

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AT&T and the Chernin Group were unsuccessful in their attempt to buy Hulu last year, so now they've decided to spend $500 million in hopes of building a worthy competitor. A press release today notes that the communications behemoth has formed a partnership with Peter Chernin's investment group. Together, they'll shell out millions in an effort to "acquire, invest in and launch over-the-top (OTT) video services." Each brings something unique to the table. AT&T's influence is obvious: the company has a nationwide presence with over 110 million wireless subscribers and over 16 million broadband customers. The Chernin Group says it will contribute financial assets — including its majority stake in Crunchyroll, an anime video-on-demand service — and "expertise" to the venture.

They'll be encroaching on territory currently owned by Netflix and Hulu, but AT&T and Chernin don't seem overly concerned. "Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space," said John Stanley, AT&T's chief strategy officer.

It's too early to know what the upcoming service will look like — especially since it may be pieced together through numerous acquisitions. It could be a straightforward Netflix and Hulu competitor, or the companies may share bigger ambitions and decide to build out an over-the-top cable competitor, perhaps with AT&T's U-verse branding. Verizon is reportedly planning to go down a similar path with the scraps of Intel's failed internet TV project. There's also the possibility that their investments will be spread across more than one video service.. We should have a better sense of their plans in the months to come, but with today's announcement, AT&T and Chernin have made it unmistakably clear that the video-on-demand field is about to grow even bigger.