March 11, 2020
When AT&T launched online TV platform DirecTV Now in 2016, it offered subscribers access to 60 channels of content for a $34.99 monthly fee. Consumer response was strong with more than 2.5 million people signing up for the promotional pricing, which included a free Apple TV device.
Additional programming price points ranged from $50 to $70 monthly, with a cloud-based DVR in the works. For AT&T, the loss-leader price point aimed at competing against Dish Network’s Sling TV, PlayStation Vue, Hulu with Live TV and YouTube TV, among others. It expected the service to generate 20 million subscribers.
Instead, as the telecom initiated price hikes, subscribers dropped the service — in droves. In the third quarter alone last year, DirecTV Now lost more than 190,000 subscribers. Since 2016, AT&T has lost more than 5 million pay-TV subs.
The telecom attributed the sub losses to “higher prices and less promotional activity,” meaning that consumers had balked at ongoing price increases and a refusal to extend discounts.
“We’re in the early innings,” COO John Stankey said at the time.
Fast-forward to the Deutsche Bank 2020 Media, Internet and Telecom Conference on March 10 in Palm Beach, Fla., where AT&T CFO John Stephens said it was too early to comment on the recent launch of the rebranded AT&T TV (formerly AT&T TV Now and DirecTV Now before that).
AT&T TV ranges from $59.99 to $79.99 monthly and are only guaranteed for 12 months, with the initial plan increasing to $93 monthly after a year.
Stephens said the telecom spent most of 2019 transitioning through about 2.5 million unprofitable online TV subs who balked at paying prices commensurate with pay-TV.
“We had a lot of customers that decided that they weren’t going to stay with us,” he said. “The linear TV industry is going through transition. And we’ll continue to see that ourselves.”
The executive believes AT&T TV will “very cost efficiently” add new profitable customers, including people who also subscribe to AT&T broadband or fiber distribution “because it’s so easy to use.”
“We are expecting that by the end of the year, you’ll see improvements in our trends that … will look like the rest of the industry,” Stephens said.