December 13, 2019
AT&T’s complicated path to online television distribution is getting a little clearer. The telecom giant plans to roll out a branded service called AT&T TV next February, according to Jeffery McElfresh, CEO of AT&T Communications.
Speaking Dec. 12 at Barclays Global Technology, Media and Telecommunications Conference in San Francisco, McElfresh said 2019 was the high point for pay-TV subscriber losses, which included DirecTV, AT&T U-verse, AT&T Watch and AT&T TV Now (formerly DirecTV Now).
The telecom’s pay-TV and OTT sub losses in 2019 have been staggering. AT&T lost 1.4 million AT&T TV subs in Q3, not including 195,000 OTT. The company lost 950,000 pay-TV subs in Q2, excluding 168,000 DirecTV Now subs. It lost another 544,000 subs in Q1, on top of 85,000 OTT.
Indeed, the DirecTV Now losses, which have been troubling in light of the marketing and company push toward OTT distribution around a known satellite brand, prompted a branding change to AT&T TV Now.
“As you think about the subscriber volumes of our legacy business, we will improve the performance of that,” McElfresh said without elaborating. “But our growth agenda is on 5G [which just bowed in 10 cities], our entertainment group and on AT&T TV that will be offered nationwide.”
He said the lower capital expenditures involved in OTT distribution and technological improvements would help AT&T TV reach the finish line.
The odds are not in the telecom’s favor. Since launching in 2015 with Sling TV and Sony PlayStation Vued, the online TV business has been considered an antidote to SVOD and savior for legacy pay-TV. But consumer interest has stagnated.
Sling remains the market leader with about 2.6 million subs. But DirecTV Now, which reached 1.5 million subs through loss-leader pricing, saw subs drop the service following a price hike. And shuttering PlayStation Vue never gained much traction beyond 500,000 subs.
“We’ll grow … in our pay-TV business with AT&T TV, coupled with a focus on our fiber broadband footprint driving incremental penetration,” McElfresh said. “And that’s how we balance out our entertainment group’s performance in 2020 and beyond.”