AT&T Drops ‘Watch TV’ Sign-Ups

AT&T has begun informing users that it will no longer offer its low-budget AT&T Watch TV service to new and returning subscribers.

“Standalone WatchTV is no longer available for new sign ups or to re-subscribe,” AT&T said in a statement. “Existing WatchTV customers who subscribe to the app or have a qualifying AT&T Unlimited plan can continue to use the service. Customers on a qualifying AT&T Unlimited plan with the WatchTV benefit can create a separate account.”

Launched in 2018 during AT&T’s contentious regulatory battle with the DOJ over its $85 billion acquisition of Time Warner, and targeting the younger high school and college-age demo using mobile devices, AT&T Watch TV is a $15 a month streaming service featuring select channels and no DVR.

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With the rebranding of DirecTV Now to $39.99 AT&T TV in March, the telecom-turned-media-giant is streamlining its streaming portfolio. AT&T TV also includes access to new subscription streaming video service, and company flagship, HBO Max.

Indeed, the telecom continues to struggle pitching standalone online TV (and linear pay-TV) to consumers. AT&T jettisoned 897,000 combined DirecTV and U-verse subs in the first quarter (ended March 31), in addition to 138,000 AT&T TV members. The one million+ sub loss was up 65.1% from the 627,000 subs lost in the previous-year period.

AT&T Stops Selling New U-verse Pay-TV Service Subscriptions

As expected, AT&T has stopped selling new subscriptions to U-verse, the telecom’s 14-year-old pay-TV service, in an attempt to move consumers toward upstart online TV service AT&T TV (formerly DirecTV Now).

“To help our employees serve our existing customers, we’re no longer selling U-verse TV. Service for existing U-verse TV customers is not impacted,” AT&T said in a statement on its website.

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AT&T lost more than 3.4 million linear TV subscribers in 2019, including 945,000 subs in the fourth quarter, ended Dec . 31. That included DirecTV and U-verse.

The telecom is pinning much of its video future on AT&T TV and HBO Max — the latter $14.99 monthly SVOD platform slated to launch in May.

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CFO: AT&T TV Streaming Service Focusing on ‘Long-Term Value’ Customers

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.

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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).

John Stephens

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.

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“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.

AT&T Launches New Online TV Service

AT&T March 2 launched a new online live TV service, AT&T TV, nationwide following a 13-market pilot test. Powered by Android TV, the platform includes live TV packages and access to third-party apps without having to switch inputs.

Programming choices and voice searches can be done with Google Assistant. AT&T is launching a national advertising campaign next week.

AT&T TV works with a compatible high-speed Internet connection. Customers can bundle AT&T TV and 1 gigabit of data are available for $39.99/month for video and $39.99/month for Internet for 12 months with a 24-month TV agreement.

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Separately, 1 gigabit of AT&T Internet is available for $49.99/month for 12 months with a 24-month agreement.

“Our customers told us what they want from their TV service and we built AT&T TV around that,” Thaddeus Arroyo, CEO of AT&T Consumer, said in a statement.

AT&T TV includes live TV packages, sports and access to more than 5,000 apps on the Google Play Store, including HBO Max when it launches in May.

Subscribers can switch between a live basketball game, Netflix, YouTube or listen to music on Pandora or Spotify without switching inputs. The platform includes a cloud-based DVR with 500 hours of storage.

AT&T TV, which replaces shuttered DirecTV Now, joins a niche market that includes Sling TV, YouTube TV, Hulu with Live TV, Philo TV and fuboTV, among others.

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AT&T TV Launch Set for Feb. 27

AT&T’s rebooted online TV platform, AT&T TV, is reportedly set to launch on Feb. 27. The service is a rebranding of DirecTV Now, the online TV service that launched to much fanfare at $34.95 monthly before hemorrhaging subscribers following a price hike.

The new service will be priced at $59.99 and requires a two-year contract. The service features 4K functionality and includes 500 hours of DVR space.

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Whether AT&T TV will succeed where DirecTV Now failed remains to be seen. DirecTV Now lost nearly 20% of its subscribers in the six months after it raised prices. DirecTV Now subs dropped from 1.8 million to 1.3 million in the past year.

AT&T posted an overall 946,000-subscriber loss, which included DirecTV satellite and U-verse wireline TV services. Things got worse in 2019 with the telecom announcing it lost more than 3.4 million linear TV subs, including 945,000 subs in the fourth quarter, ended Dec . 31.

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AT&T TV Streaming Service Launching in February 2020

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).

AT&T Communications CEO Jeffrey McElfresh

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.

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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.

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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.”

CFO: AT&T TV Sub Loss Peaked in Q3

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.

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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.”

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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.

AT&T CEO Defends Media Strategy, Including John Stankey as Possible Successor

Facing a boycott of sorts from an activist investor calling for senior management changes at AT&T, CEO Randall Stephenson Sept. 17 sought to outline to Wall Street why the telecom under its current management is on the right path in a rapidly changing media landscape.

Speaking Sept. 17 at Goldman Sachs 28th Annual Communacopia confab in New York, Stephenson said his decision to spend hundreds of billions of dollars acquiring satellite operator DirecTV and Time Warner was based in part on an evolving in a digital ecosystem.

“If you had asked me that question five years ago, I’d be hard-pressed to say it makes sense, in the old world,” he said. “In the new world, it makes all the sense in the world. We believe people are going to spend more and more of their day watching premium content.”

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Stephenson said AT&T has more than 170 million “customer relationships” requiring more bandwidth and connectivity to consume content, which is why he spearheaded the telecom’s $85 billion acquisition of Time Warner two years ago and the $67 billion purchase of DirecTV in 2015.

AT&T also operates 5,500 retail stores nationwide.

But it was those acquisitions, which have ballooned AT&T’s debt exponentially, while at the same time DirecTV and AT&T U-verse continue hemorrhaging subscribers (1 million this year) that led investor Elliott Management, who owns a $3.2 billion stake in AT&T, to write a letter to the board seeking changes.

Specifically, Elliott CEO Paul Singer wants Stephenson and COO John Stankey, who is also CEO of WarnerMedia, replaced.

Stephenson, who says the board will “evaluate [the letter] and see what makes sense for our shareholders,” says the content creation business is changing dramatically — moving from a linear TV distribution business model to over-the-top video.

The executive says WarnerMedia is uniquely qualified to meet the challenge with both himself and Stankey in their current positions.

“It’s a hard play to take a legacy company on legacy distribution models and make a pivot into digital distribution,” Stephenson said. “[Stankey] has done a really nice good job breaking down the [intra-company] silos. He’s got experiences that are long, wide and deep.”

“[WarnerMedia] is one of the largest-scaled TV and film production studios in the world,” he said, adding that AT&T has now become the largest distributor of HBO in the world, including 66% bigger than the premium channel’s No. 2 distributor.

Stephenson said acquiring Time Warner was due to the fact the media distribution world was changing and not growing on legacy pay-TV platforms, but rather digital platforms.

“We’ve had to reorient the business,” he said.

AT&T, Starz Ink New Carriage Agreement, Including OTT Video

AT&T and Starz, a Lionsgate company, Aug. 30 announced a new multiyear content carriage agreement. The deal secures rights for AT&T to offer the full suite of Starz and Starz Encore premium linear and HD channels, on-demand, HD on-demand to subscribers of DirecTV, AT&T TV (formerly DirecTV Now) and U-verse video platforms.

“Our customers want more choice and value in addition to compelling entertainment in our channel offerings,” Daniel York, chief content officer, AT&T Communications, said in a statement.

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“Starz is pleased to have found a mutually beneficial way to extend our relationship over the next several years to give millions of AT&T subscribers access to our acclaimed premium original content and vast library of blockbuster films,” said Jeffrey Hirsch, Chief Operating Officer of Starz. “By working together, both companies are in a position to continue to deliver great value to our shared customers.”