News & Analysis
AT&T says in a recent filing to the Securities & Exchange Commission that DIRECTV Now added roughly 200,000 paying subscribers in December, the streaming service’s first full month of operation.

The disclosure, which was first reported by The Wall Street Journal, surprised some industry analysts because DIRECTV Now has been riddled with technical errors, often rendering the service unusable.

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The analysts noted that other live streaming services such as Dish’s Sling TV and Sony’s PlayStation Vue took months to hit the 200,000 mark.

But other analysts such as Craig Moffett called the December results “disappointing” because he feels they are not adding to AT&T’s overall value due to the relatively low cost of monthly subscriptions.

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So, what’s the truth here? Is 200,000 a good start? Will DIRECTV Now become a major success despite its technical issues? Or will AT&T’s recent decision to eliminate a $35-a-month introductory offer (for 100 channels) stop DIRECTV Now’s first month subscription growth in its tracks?

A few thoughts:

The addition of 200,000 paying subscribers in the first month is very impressive for any live streaming service. From HBO to Showtime to Sling TV, live streaming services have struggled to generate customers, particularly in the early months. Thanks to the introductory offer, some catchy promos, and DIRECTV’s brand power built over two decades, DIRECTV Now was able to do what others could not.

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However, the subscription growth is likely to slow, if not actually retreat, this month for two reasons:

1. Many consumers signed up for DIRECTV Now because the $35 introductory offer was irresistible. Seriously, where else could you get 100 channels for just $35 a month?

2. DIRECTV Now’s technical issues, which include everything from false sports blackouts to login problems to recurring error codes that prevent the user from loading any channel, is having a dramatic impact on the service’s churn rate. Look at Twitter, Facebook or AT&T’s own message boards and you will find hundreds of DIRECTV Now subscribers saying they are going to cancel. They just can’t take it anymore.

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Finally, many users who will not cancel this month may do so in the next month or so when their three-month Apple TV plans expire. (DIRECTV Now gave away free Apple TVs, valued at $149, if you pre-paid for three months of service.) If it weren’t for the Apple TV giveway, DIRECTV Now’s sub totals would be in freefall this month.

Unless DIRECTV Now can fix its technical problems in the near future, the streaming service’s promising first month of subscription growth could be a mere footnote in an otherwise dismal history written in the years ahead.

— Phillip Swann