AT&T CEO Stephenson, in a conference call with analysts on Monday, called DirecTV Now "the big driver that we're envisioning" from the Time Warner purchase.
The aim is to combine Time Warner's programming with AT&T's data to create customisable services that allow sharing with friends and delivery of ads that interest the viewer, executives of both companies said.
By owning Time Warner, AT&T will be able to act more quickly to add content and other features to programming from HBO, Warner Bros and Turner's cable networks, Stephenson said.
He said he envisioned features not currently offered, including giving users the ability to share clips from shows on messaging or social platforms.
"Trying to develop those types of capabilities with the current content providers is proving difficult," he said. With Time Warner programming under the same corporate roof, "we can begin to innovate our content much quicker."
Time Warner also could produce some content reserved exclusively for AT&T platforms, Csathy of Creatv Media said.
Some Wall Street analysts were sceptical of combining distribution and content. Companies have excelled at one or the other, Cowen and Company analyst Doug Creutz said, but "the odds that one company can succeed at both of these things are very low."
"Being mediocre at both is probably a far worse business plan than being great at one or the other," he said.
Providing something different will be key to winning customers, Parks Associates analyst Hower said.
"Can you price it more competitively than other services? Can you add unique services? Do you have a sleeker interface?” Hower said.
With so many companies jumping into online video, "it comes down to who can differentiate themselves,” he said. — Reuters