December 3, 2019
When AT&T launched DirecTV Now in 2015, the telecom had big hopes the standalone online TV service would help migrate pay-TV subs to over-the-top distribution.
The media company envisioned gradually weaning consumers from the cable guy (U-verse) and satellite (DirecTV) to streaming video and competing against Sling TV, (shuttering) PlayStation Vue, YouTube TV and Hulu with Live TV, among others.
Initial consumer response to the loss-leading $34.99 monthly service was strong, quickly generating 1.8 million subscribers. Then came a $5 price hike, and DirecTV Now began hemorrhaging subs — losing 83,000 subs in Q1 after shedding 267,000 subs in Q4 2018. It lost another 168,000 DirecTV Now subs in Q2.
AT&T had seen enough, changing the DirecTV Now brand name to AT&T TV.
Speaking Dec. 3 at the Wells Fargo Technology, Media & Telecom Conference in Las Vegas, CFO John Stephens said the worst is behind sub losses for AT&T TV. Indeed, the telecom lost a whopping 1.4 million AT&T TV subs in Q3.
“The transition we are going through is new stuff,” Stephens said. “But we are optimistic we’ve hit the peak sub losses in the third quarter.”
Stephens said going forward sub losses should be offset by growing broadband subscribers and pending SVOD service HBO Max, which launches early next year, and will be targeted towards AT&T’s 170 million consumers, including mobile and broadband. That tally increases to 200 million when factoring in CNN and sports-themed Bleacher Report.
“We have a base that’s dramatic,” he said.
Stephens contends AT&T’s rollout of 5G wireless and high-speed fiber networks will return AT&T TV to positive growth.
“Access to stream AT&T TV is going to be more efficient,” he said.