DirecTV Now Raising Prices, Changing Service Plans

Despite losing nearly 270,000 DirecTV Now subscribers in the fourth quarter (ended Dec. 31, 2018), AT&T is initiating a $10 monthly price hike for its standalone online TV service that takes effect in early April.

DirecTV Now is also changing service plan options for new subscribers to include Plus ($50 for 40 channels, including CNN, ESPN and HBO) and Max ($70 for 50 channels, including HBO/Cinemax, ESPN and regional sports networks).

The plans replace existing (wordy) options such as “Live a Little Plan” ($40) with 65 channels; “Just Right” ($55) with 85 channels; “Go Big” ($65) 105 channels; and “Gotta Have It” ($75) for 125 channels.

Existing subscribers will have their plans grandfathered in.

AT&T is also offering OTT streaming versions of its linear pay-TV packages, including “Entertainment” (65 channels for $93 per month); “Choice” ($110 and 85 channels); “Xtra” ($124 for 105 channels); “Ultimate” ($135 for 125 channels); and “Optimo Mas” ($86 for 90 channels).

As cord-cutting increases among consumers, AT&T hopes migrating linear TV subscribers to OTT distribution translates into more broadband subs. The company ended 2018 with 15.7 million high-speed Internet subs.

 

 

 

 

Hulu Online TV Service Tops 2 Million Subs

Hulu with Live TV, the subscription streaming video service’s separate online TV platform, has reportedly topped two million subscribers.

Launched in May 2017, Hulu’s online TV service ranks second in subscribers behind Dish Network’s pioneering Sling TV with 2.4 million (at the end of 2018), AT&T’s DirecTV Now (1.6 million) and YouTube TV (1 million). Sony’s PlayStation Vue reportedly has more 500,000 subs.

Hulu, which is co-owned by Disney, Fox, Comcast and WarnerMedia, continues to grow subscribers while DirecTV Now’s highly-publicized $39.99 service lost 267,000 subs in the most-recent fiscal period. AT&T attributed the decline to raising the monthly fee $5 to $44.99, among other factors.

Sling TV ushered in the online TV market in 2015 as a response to cord cutting and burgeoning SVOD services such as Netflix. It was the first service to offer standalone access to ESPN and other pay-TV channels traditionally tethered to big bundle subscriptions.

Disney, which is in the final stages of gaining regulatory approval of its $71.3 billion acquisition of 20th Century Fox, would become majority stake holder in Hulu and its 25 million subs.

The media giant reportedly is considering acquiring WarnerMedia’s 10% stake as the latter finalizes launching its own over-the-top video service in the fourth quarter along with Disney’s branded Disney+ SVOD service.

 

 

AT&T Eyeing HBO, Warner Content for AVOD Distribution

AT&T currently markets standalone over-the-top video services DirecTV Now and Watch TV — the latter offering mobile access to 30 pay-TV channels for $15 monthly and no long-term contract.

Watch TV has generated about 500,000 subscribers since its debut last June. DirecTV Now, which jettisoned more than 260,000 subs after ending promotional pricing late last year, has about 1.6 millions subs.

The telecom now appears to be considering ad-supported VOD — long a stepchild to subscription streaming VOD service such as Netflix, Amazon Prime Video and Hulu.

With Amazon subsidiary IMDb.com launching a free ad-supported VOD service, Hulu’s basic SVOD plan featuring commercials, and Comcast launching AVOD for Xfinity subscribers in 2020, AT&T is pondering ad-supported distribution for select content from subsidiary WarnerMedia.

Speaking on the Jan. 30 fiscal call, CEO Randall Stephenson reiterated that companies with “very strong” IP, “deep libraries” of IP are the ones that are going to succeed over time.

He said Warner Bros. CEO Kevin Tsujihara and WarnerMedia boss John Stankey have been analyzing optimal distribution channels and license opportunities for content.

Tsujihara helped craft the recent non-exclusive license extension with Netflix for “Friends,” a deal that lets WarnerMedia stream the venerable sitcom through its pending SVOD service launching later this year.

Stephenson said WarnerMedia content would be targeted toward what he called “two-sided” business models that include SVOD and AVOD.

“There’s a demand and the customers have become accustomed to advertising free subscription services,” he said. “And we think HBO and a lot of the Warner content [is] premium content will fit into that mold.”

While Stephenson didn’t reveal AVOD specifics, he said the recent acquisition of Xandr to help sell targeted digital advertising to AT&T’s 170 million mobile and broadband subscribers, underscored opportunities for advertising-supported models that help keep content (i.e. catalog) prices down, keep consumer costs down and help fund additional content acquisition and purchasing.

“Xandr is a big part of making that model work,” he said. “So, our model will be a two sided model, with a heavy subscription service, with some ad-supported elements to it as well.”

 

 

 

AT&T Posts 267,000 DirecTV Now Q4 Subscriber Losses

Stop the funeral for pay-TV.

AT&T’s signature alternative — broadband-based DirecTV Now — suffered a major blow in the fourth quarter, ended Dec. 31, 2018.

The telecom Jan. 30 reported that the standalone online TV service lost 267,000 subscribers compared to gains of 368,000 subs in the previous-year period. The period included 65,000 free trial subscriptions.

AT&T attributed the decline to ending the service’s $35 monthly promotional pricing.

The tally does not include WatchTV, AT&T’s recent app-based $15 online TV service, which ended the year with 500,000 subscribers.

DirecTV Now ended the year with 1.59 million subs compared to 1.15 million subs at the end of 2017.

The subscriber loss is a shot across the bow for online TV, which launched in 2015 with Dish Network’s Sling TV. Hailed as an antidote to declining pay-TV – and SVOD – online TV offered premium TV channels without long-term contract at a fraction of the price of the traditional cable bundle.

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Yet, AT&T’s legacy U-verse pay-TV service added 12,000 subscribers, compared to a loss of 60,000 video subs last year. The distribution channel ended the year with 3.68 million subs compared to 3.63 million at the end of 2017.

The company ended the year with 14.4 million high-speed Internet subscribers, which was up a scant three-tenths of a percent from 14.35 million at the end of 2017.

Meanwhile, satellite service DirecTV lost 403,000 subscribers in the quarter – up 274% from a loss of 147,000 subs in the previous-year period.

El Segundo, Calif.-based DirecTV ended the year with 19.2 million subs – down 6% from 20.4 million subs at the end of 2017.

For AT&T CEO Randall Stephenson, reducing the company’s $183 billion debt load following the $85 billion acquisition of Time Warner is the No. 1 goal in 2019.

“In 2018, we generated record free cash flow while investing at near-record levels,” Stephenson said in a statement. “Our dividend payout as a percent of free cash flow was 46% for the quarter and 60% for the year, allowing us to increase the dividend for the 35th consecutive year. This momentum will carry us into 2019 allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.

 

YouTube TV Expands to 95 Markets Nationwide

Google-owned YouTube TV Jan. 23 disclosed it is expanding service to 95 markets nationwide. The market penetration now rivals online TV competitors such as Dish Networks’ Sling TV and AT&T’s DirecTV Now.

Launched nearly two years ago, YouTube TV costs $40 monthly offering more than 60 pay-TV channels, including ABC, CBS, Fox, NBC, TNT, TBS, CNN, ESPN and FX, six concurrent streaming options and a cloud-based DVR.

“With this national expansion, we’re providing complete local affiliate coverage by providing local feeds from the four largest broadcasters in over 90% of the markets where YouTube TV is available,” Ben Moores, program manager, YouTube TV, wrote in a blog post.

 

 

 

Pluto TV Bows Service in Germany, Austria

Pluto TV, the Los Angeles-based ad-supported online TV platform, has begun streaming operations in Germany and Austria. The launch follows a similar move in the United Kingdom in October through a collaboration with satellite TV operator Sky.

Sky, which was recently acquired by Comcast, is an investor in Pluto TV, along with ProSiebenSat.1 in Germany.

“The current timing of the launch of Pluto TV in Europe, especially in the German-speaking market, is ideal to harness the great potential for the distribution of linear video offerings via the Internet,”Olivier Jollet, managing director Europe, said in a statement.

Based in the company’s Berlin office, Jollet said the online TV platform’s marketing approach is to underscore the platform’s simplicity at a time when he says typical households subscribe to upwards of three or more – often redundant – over-the-top video services.

“[Consumers] are increasingly losing interest in this,” he said.

Pluto TV launched in 2016 as an app on Sony PlayStation about a year after Dish Network’s groundbreaking rollout of Sling TV – the first standalone online TV service offering pay-TV channels without a long-term contract.

The online TV market now includes PlayStation Vue, AT&T’s DirecTV Now, YouTube TV, Hulu with Live TV and Charter’s Spectrum TV Plus, among others.

Last month, Pluto inked a licensing deal with Discovery for channels such as Discovery Channel, HGTV and Food Network, Animal Planet, ID, Discovery Life, Science Channel, and TLC, among others.

 

 

 

WarnerMedia OTT Video Platform to Offer Three Service Tiers

WarnerMedia’s much-anticipated over-the top video platform launching in the fourth quarter of 2019 will include three levels of service: an entry-level movie-focused package; a premium service with original programming and theatrical movies; and a third service that bundles content from the first two plus an extensive library of Warner Bros., HBO and Turner programming and licensed content.

Speaking Nov. 29 at the telecom’s analyst day event in New York, CEO John Stankey, CEO of WarnerMedia said the company’s unnamed/unpriced SVOD service would complement existing business (i.e. HBO Now with 5 million subscribers); benefit current distribution partners; expand the audience and increase engagement around content; and provide data and analytics to inform new products and better monetize content.

Stankey said the SVOD service would be a combination of original content, movies, TV shows, library fare and third-party programming.

“It’s a software experience wrapping creative excellence, that we’re going to showcase specific brands … to help the consumer find the right kind of curated content they want,” he said. “It’s gotta be a great value proposition.”

Separately, CEO Randall Stephenson said the merger with Time Warner continues to take a lot of time …”Unfortunately, a lot of it involve[s] litigation with the government.”

The CEO was referring to the Justice Department’s decision to appeal an unfavorable federal judge’s antitrust decision approving AT&T’s $85 billion acquisition of Time Warner.

The U.S. District Court of Appeals in the District of Columbia is expected to rule early next year.

“We are well positioned for success as the lines between entertainment and communications continue to blur,” said Stephenson. “If you’re a media company, you can no longer rely exclusively on wholesale distribution models. You must develop a direct relationship with your viewers. And if you’re a communications company, you can no longer rely exclusively on oversized bundles of content.”

Indeed, AT&T’s core DirecTV pay-TV service suffered through one of its worst fiscal quarters, losing nearly 350,000 subscribers. The losses were offset to a degree by DirecTV Now, the standalone SVOD service with about 1.8 million subs.

AT&T warned that elimination of promotional pricing at DirecTV Now would likely result in negative net sub adds in the fourth quarter of 2018 and in 2019.

DirecTV Launching Proprietary Streaming Media Device in 2019

As expected, DirecTV plans to roll out a proprietary streaming media device in 2019 that would enable consumers to access online TV service DirecTV Now using their own broadband or high-speed Internet connectivity.

The device, which would be similar to a Roku or Apple TV device, would help DirecTV reduce subscriber acquisition costs typically associated with the installation of pay TV service, including truck rolls and employees climbing the roof installing satellite receivers.

Speaking Nov. 14 at the Morgan Stanley European Technology, Media & Telecom confab in Barcelona, AT&T CFO John Stephens said the streaming device would afford DirecTV with the same data insights and targeted advertising (driven by data analytics subsidiary Xandr) as linear pay-TV.

“It’s a device that allows us to instead of rolling a [service] truck to the home, we roll a UPS or FedEx truck to the home,” he said.

The executive said the box would help AT&T boost broadband subscriptions, which currently total about 15 million households.

“We certainly hope it’s our own fiber, but it can be on anybody’s broadband,” Stephens said.” “We are testing it with employees today.”

Charter Communications followed a similar strategy in 2015 when it launched standalone online TV service Spectrum TV Plus to broadband customers. New subs were given a free Roku 3 streaming media device to facilitate the $20 monthly service.

Separately, Stephens said oral arguments in the Justice Department’s appeal of the $85 billion AT&T/Time Warner merger are due Dec. 6 – with a decision by the three-judge panel expected next year.

“Quite frankly, we’re confident the decision will be upheld,” he said. “It’s a process we have get through. But we’re not spending a lot of time thinking about it.”

 

Online TV Growth Slows Despite Record Q3 Pay-TV Subscriber Exodus

The most-recent fiscal quarter (ended Sept. 30) was not a good one for pay-TV operators, which continue to see increasing numbers of subscribers exit for video alternatives online.

Or not.

It was also a wake-up call to multi-video program distributors who think online TV is the answer to fickle pay-TV consumers.

 The cable, satellite and telecom operators lost a combined 1.2 million video subs, ending the quarter at 91 million, including 88.2 million residential customers, according to new data from Kagan, a media research group within S&P Global Market Intelligence.

Meanwhile, while many pay-TV subs are becoming cord-cutters, they’re not all migrating to online TV platforms such as Sling TV, DirecTV Now, Hulu with Live TV, YouTube TV and PlayStation Vue.

Kagan found that online TV services gained an estimated 2.1 million subs in the past nine months – not enough to offset a decline of 2.8 million pay-TV subs.

Indeed,Dish Network-owned Sling TV and DirecTV Now added just 75,000 subs in 3Q, compared to about 530,000 additions in the previous-year period. The additions were the lowest since the market’s launch in 2015.

Satellite had its worst quarter on record with a loss of 726,000 subs, according to Leichtman Research Group. Cable lost nearly 1.1 million subs – the worst performance since 2014.Telco subs fell by 94,000, led by Verizon, which jettisoned 63,000 subs.

Telephone providers lost about 80,000 video subs compared to a loss of 180,000 subs last year. Pay-TV services (excluding online TV) lost 1.05 million subs compared to a loss of about 940,000 subs in 2017.

“This marked the most net losses ever in a quarter for the pay-TV industry,” Bruce Leichtman, president and principal analyst for Leichtman Research Group, said in a statement. “Satellite TV had more combined net losses in than in any previous quarter.  These net losses were largely driven by corporate strategies focused on acquiring and retaining more profitable subscribers.”

Leichtman attributed some of the online TV sub growth slowdown to corporate parents’ emphasis on improving the profitability of the Internet-delivered flanker brands.

“[This] reduced net quarterly adds in the segment, resulting in [online TV] not helping to mitigate overall pay-TV losses to the degree they had in recent quarters,” he said.

Pay-TV Providers Subscribers at end of 3Q 2018 Net Adds in 3Q 2018
Cable Companies
Comcast 22,015,000 (106,000)
Charter 16,628,000 (54,000)
Cox* 4,035,000 (30,000)
Altice 3,322,800 (28,100)
Mediacom 793,000 (15,000)
Cable ONE 328,921 (11,191)
Total Top Cable 47,122,721 (244,291)
Satellite Services (DBS)
DIRECTV 19,625,000 (359,000)
DISH TV 10,286,000 (367,000)
Total DBS 29,911,000 (726,000)
Phone Companies
Verizon FiOS 4,497,000 (63,000)
AT&T U-verse 3,693,000 13,000
Frontier 873,000 (29,000)
Total Top Phone 9,063,000 (79,000)
Internet-Delivered (vMVPD)
Sling TV^ 2,370,000 26,000
DIRECTV NOW 1,858,000 49,000
Total Top vMVPD^ 4,228,000 75,000
Total Top Providers 90,324,721 (974,291)

 

 

Netflix, Amazon Prime and Hulu Lead Parks Associates Top 10 OTT Services List

Netflix, Amazon Prime and Hulu, in that order, lead Parks Associates updated list of the top 10 subscription over-the-top (OTT) video services in the U.S. market. The list, released Nov. 7, is based on estimated number of subscribers.

The full list in order is:

  1. Netflix
  2. Prime Video Users (Amazon Prime)
  3. Hulu (SVOD)
  4. HBO Now
  5. Starz
  6. MLB.TV
  7. Showtime
  8. CBS All Access
  9. Sling TV
  10. DirecTV Now

 

“Which company is the leading OTT video subscription service remains a topic of debate,” said Brett Sappington, senior director of research, Parks Associates, in a statement. “According to our estimates, Amazon has more Prime Members than Netflix has subscribers. However, when you consider only those Prime Members that use Prime Video, Netflix is the largest. Hulu remains the third largest but continues to grow its subscriber base.”

The firm noted the rise of a second tier of OTT video services from services with recognized brands, including several with high profile original content. Online pay-TV services Sling TV and DirecTV Now round out the top 10, ahead of similar services Hulu with Live TV, YouTube TV and PlayStation Vue. Online pay TV has been one of the fastest growing segments in the OTT video space, with aggressive marketing by all, according to Parks.

“HBO, Starz, Showtime, and CBS All Access demonstrate the powerful attractiveness of original content through series like ‘Game of Thrones’ and ‘Star Trek: Discovery,’” Sappington said in a statement. “This pattern suggests new services such as WarnerMedia’s DC Universe and the forthcoming streaming service from Disney could achieve success quickly.”

The top subscription sports OTT video services are MLB.TV, WWE Network and ESPN+. MLB.TV continues to lead the sports OTT subscription category, benefiting from its long tenure as a streaming service and popularity among dedicated baseball fans, according to Parks. WWE also has a dedicated fan base and publicly reported having more than 1.2 million U.S. subscribers at the end of Q3 2018, according to Parks. ESPN+ is a newcomer to the OTT video marketplace but recently announced that it had exceeded 1 million subscribers.

Other findings include:

  • OTT video subscription penetration has reached 64% of U.S. broadband households, with more than two-thirds subscribing only to one of the top three services, Netflix, Prime Video, or Hulu;
  • The online pay-TV audience is similar to the OTT audience — they are younger and quicker to adopt new technologies when compared to traditional pay-TV households; and
  • Over the past three years, OTT churn rates have gradually fallen each year from 31% of OTT subscriptions cancelled each year in 2015 to 28% in 2018.