AT&T Finalizes Exclusive Distribution Agreement With Magic Leap

AT&T Exclusive Distribution Deal

Over the past few weeks, AT&T has been in the news for different acquisition deals ranging from its acquisition of TimeWarner in the $85billion deal to the purchase of AppNexus for almost $2billion. This week, the giant tech company is in the news again for finalizing its agreement with Magic Leap to become the exclusive distributor of the reality start-up’s products when it launches in the U.S. Media outlets claim that AT&T strategic deals with media companies are in a bid to establish itself as a giant and a force to be reckoned with in the media industry.

In a statement released yesterday, AT&T stated that upon Magic Leap’s release of its products, its customers would rank among the first set of customers to experience the products in specific AT&T stores in San Francisco, Chicago, Atlanta, Los Angeles and Boston.

At the time of this report, both companies have not revealed the details of the financial implications of the exclusive distribution deal. However, it will be recalled that Magic Leap reportedly completed its Series D round in the Temasek-led March round where the reality start-up was valued at $6.3billion. The strategic terms of the deal have, however, been disclosed. Sources claimed that in addition to AT&T’s exclusive right to distribute Magic Leap’s first device, the tech company also has the exclusive rights to carry out different operations with the start-up on a wide range of areas including content distribution, network access, and devices.

Companies’ Insiders Opinions  

Commenting on the deal, John Donovan, AT&T Communications CEO, expressed the company’s excitement at pairing its leading technologies, content platform, unmatched network as well as its broad scope of customer base together with the efforts of the start-up in building the next generation computing devices.

Donovan added that the company was putting in efforts to design and offer changes to the future of connectivity and entertainment, and the exclusive deal with Magic Deal would be an avenue to set up new experiences and opportunities for different people.

Sources claimed that Magic Leap had raised over $2billion for the development of its product’s hardware and software components, but it is yet to launch its first product. The launch might, however, be closer than we know as Magic Leap yesterday streamed a demo and the specifications of its first commercial device, Magic Leap One, Creator Edition.

Rony Abovitz, the founder, CEO and President of Magic Leap, stated that the company was partnering with AT&T because of their belief in the combined vision of the expansion of edge computing, high-speed network as well as profoundly integrating creative content. As such, he expressed that the combination of the strength of AT&T’s evolving network with the computing platform of Magic leap had the possibility of transforming how people experienced computing processes.

Sources claimed that the partnership is likely to come about the same time as the official launch of the start-up’s first commercial device, Magic Leap One, Creator Edition, which has been described as a lightweight and wearable computer for the enrichment of customers’ experience of the virtual content. The creator edition is reportedly a limited edition designed for designers and developers and would ship before the end of the year.

Till date, Magic Leap has reportedly raised about $2.35 billion to date in which he had gotten support from giant companies such as Google which invested through Alphabet and GV, Axel Springer and Alibaba.

AT&T Recent Strategic Deals

It is settled that carriers have a vital role in ensuring that portable devices are made available to the final consumers. If it is a widely received device, for instance, the first set of iPhones exclusively carried by AT&T, the carrier deal always ends up being significantly profitable for both companies. For the carrier, the partnership helps them attract new customers, and the device maker also gets an avenue to offer its devices coupled with mobile subscriptions to utilize them. For both companies, the friction for consumers is always reduced as a result of such deals.

Analysts have claimed that AT&T isn’t just playing on that level with the Magic Leap exclusive distribution deal. According to tech analysts, since AT&T and some other telecom carriers lost a considerable deal on including value-added services on the primary mobile data connectivity and selling their devices at a subsidized price, the carriers have been trying different means to recoup what they lost. As such, they have been capitalizing on the fact that many media companies are not maximizing their potentials and are, therefore, buying up the content assets of these companies so they can try to win over customers which were lost during the Smartphone boom, and make up for the stagnation in their network access sectors.