AT&T yesterday surprised some industry observers (including yours truly) by not releasing sub numbers for its live streaming service, DIRECTV Now. In its first quarter report, the telco would only say that subscriber growth “continued to increase.”
The sudden secrecy took analysts aback because AT&T revealed after the first quarter that DIRECTV Now had more than 200,000 paying customers at the end of the year. (The service debuted on November 30.)
If AT&T was willing to divulge the year-end numbers, which were impressive, it must be hiding something by not disclosing the first quarter totals. Right?
Well, not necessarily.
The omission led industry analyst Rich Greenfield to speculate on Twitter yesterday that the first quarter sub additions could have been as low as 100,000, which would be a major disappointment after the first-month success and possibly a sign the service is in trouble.
Greenfield’s opinion was not met with much skepticism; after all, DIRECTV Now’s live streaming was riddled with technical errors in the first quarter so it’s not a stretch to assume a large number of subscribers dropped the service.
But let’s not forget that Discovery CEO David Zaslav recently said that DIRECTV Now has more than 400,000 subscribers, which would mean the streaming unit gained roughly 200,000 more in the first quarter.
And Zaslav should know. His Discovery channels are on DIRECTV Now so he would have access to certain subscriber data.
Sure, it’s possible Zaslav got the number wrong, but his public disclosure probably supersedes any assumption that DIRECTV Now’s first quarter sub growth was reduced by as much as 50 percent.
Plus, AT&T’s decision to release the year-end totals runs counter to what has become the industry standard in the streaming category. Sling TV, PlayStation Vue, HBO Now and others have all been tight-lipped about their running subscription totals. By not releasing specific numbers yesterday, AT&T simply fell back in line.
The telco broke precedent by revealing the year-end totals because they were so impressive. 200,000 in one month? For a new live streaming service? Who wouldn’t want to release those numbers?
So let’s not get too excited here. The decision to keep the numbers secret does raise eyebrows. But other evidence suggests it might be for less than sinister reasons.
The bigger question facing AT&T today is not DIRECTV Now’s sub growth, but rather does the telco have a coherent strategy for its video division.
AT&T yesterday said DIRECTV did not generate any additional subscribers in the first quarter while U-verse lost 233,000.
When AT&T bought DIRECTV in 2015, the company said it planned to migrate U-verse subscribers to the satellite TV service and soon generate a net gain for both services combined. However, the first quarter totals suggests that U-verse is being hurt by the strategy, but DIRECTV may not be gaining, at least not by enough to warrant the damage done to U-verse.
AT&T CEO Randall Stephenson may need a new plan to shore up U-verse’s shrinking numbers while simultaneously building up DIRECTV.
And, of course, developing and stabilizing DIRECTV Now in his spare time.
— Phillip Swann