AT&T: DirecTV Now Sub Gains Offset Declining Pay-TV

Online TV service DirecTV Now added 342,000 subscribers through the end of the second quarter (ended June 30), up from 152,000 subs added in the previous-year period.

The platform, which added a new user interface and cloud-based DVR in the quarter, now has more than 1.8 million subs compared to less than 500,000 last year.

The gains offset ongoing subscriber declines at DirecTV and U-verse, which totaled a combined 262,000 subs. AT&T’s entertainment group ended the period with 25.4 million subs – up slightly from 25.2 million last year, which includes 20 million (DirecTV), 3.7 million (U-verse) and 1.8 million (DirecTV Now).

“The customers we lost, the cord-nevers, the cord-cutters, we’ve replaced with products that are in their affordability range,” John Donovan, CEO of AT&T Communications, said on the fiscal call.

Broadband subs increased to 13.7 million from 13.2 million last year, underscoring AT&T’s rapid deployment of OTT video platforms, including the June 28 bow of WatchTV, a $15-a-month stand-alone service.

WatchTV features 30+ live channels and is compatible on virtually every current smartphone, tablet or Web browser and certain streaming devices. In addition to live programming, WatchTV includes more than 15,000 TV shows and movies on demand.

Donovan said subscriber-acquisition costs, operational costs, including deployment, are much less than linear TV.

“Over time, as we build those [OTT video sub] volumes, those are products that will get scalable margins,” he said.

AT&T said consumers continue to choose higher broadband speed tiers. About 68% of all broadband subs have purchased speed tiers between 18 megabits and 1 gigabit. Half of all broadband subs on AT&T’s fiber network have speeds of 100 megabits or more. Subs with speeds of 100 megabits or faster have more than doubled year over year.

 

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