AT&T: 4 Things We Just Learned About DIRECTV & DIRECTV Now

AT&T yesterday released its second quarter report which showed that its three video services lost a combined total of 199,000 subscribers in the time period.

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DIRECTV, the nation’s top satellite TV service, lost a net of 156,000 subscribers in the quarter while AT&T’s U-verse dropped 195,000.

DIRECTV Now was the company’s only shining light, adding a net of 152,000 subscribers, bringing its total to 491,000 at the end of June.  The live streaming service doubled its subscription growth from the first quarter when it added just 72,000 new customers.

Following the report’s release, AT&T executives took questions from financial analysts in a telephone conference call. The company officials discussed everything from DIRECTV Now’s growth to DIRECTV’s sudden decline as well as AT&T’s decision to bundle its wireless service with video.

Here are four things we learned from the conference call.

1. AT&T says more consumers are interested in mobile and Internet-based video services, which contributed to the rise of DIRECTV Now and the decline of U-verse and DIRECTV.

“The second quarter traditionally has seasonal pressures, but we also are feeling the impact of the overall industry trend of more customers wanting mobile and over-the-top (Net-based) offerings. The pace of that change seems to have picked up a bit so far this year,” said John Stephens, AT&T’s chief financial officer.

Stephens added that half of DIRECTV Now’s new customers are coming from traditional pay TV operators while the other half did not have any video service prior to subscribing.

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DIRECTV Now has experienced recurring technical issues since its debut on November 30, but Stephens did not address that concern. He said AT&T is continuing to improve the service, noting the addition of new streaming partners such as Roku and the expansion of local channel availability.

As for DIRECTV and U-verse, Stephens said they could continue to lose subscribers later in the year, but he believes the decline will “ebb” towards the end of the year.  Considering that DIRECTV traditionally adds subscribers in the third quarter due to the sale of the NFL Sunday Ticket package, AT&T’s acknowledgement that more losses are coming could worry investors.

2. AT&T said the company’s bundling of wireless and TV service is paying off. (The company assured investors prior to the DIRECTV merger that the bundling of the new services would generate significant new revenue for the company.)

“The number of wireless subscribers who also have a TV service from us has increased by more than four million, or up 31 percent, since the close of the DIRECTV deal (in 2015),” Stephens said. “Conversely, TV subscribers with wireless plans have increased by nearly 1 million, or 18 percent. And the number of TV subscribers in our footprint with high-speed Internet service has increased by 10 percent.”

He added that fewer wireless subscribers eventually drop service if they bundle with DIRECTV or DIRECTV Now.

3. AT&T refused to disclose if it will offer the NFL Sunday Ticket as part of a bundle with DIRECTV Now in the fall. Stephens said the company had ‘nothing to announce today.’

There have been rumors that DIRECTV Now will include the popular package of out-of-market NFL games this fall. If it did, however, it could hurt subscription growth for DIRECTV, the satellite service, which now has the Sunday Ticket as an exclusive.

4. AT&T says DIRECTV Now has thus far experienced “dramatic growth,” but more growth is coming. 

Stephens praised the live streaming service’s progress, noting that the company slowed its marketing effort in the first quarter to concentrate on improving the technical performance. (The reduced promotional initiatives, coupled with the recurring technical issues, led to a modest rise of 72,000 subscribers in the first quarter.)

He added that AT&T believes there is room for a lot more growth.

“I think there’s clearly a demand for it, an opportunity for it and for us that allows us to get to a lot of customers we don’t normally serve today, MDUs, millennials, people who haven’t bought or haven’t been able to have the creditworthiness to buy our premium products,” Stephens said.

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— Phillip Swann

About TV Answer Man (521 Articles)
The TV Answer Man is veteran journalist Phillip Swann who has covered the TV technology scene for more than two decades. He will report on the latest news and answer your questions regarding new devices and services that are changing the way you watch television.

1 Comment on AT&T: 4 Things We Just Learned About DIRECTV & DIRECTV Now

  1. I only subscribed to Directvnow at a discounted price as part of an unlimited plan for my new HomeBase. I have two Roku’s and my experience is that on both of them DTN’s live streaming is perfect but any attempt to watch VOD or use the dvr function sends me back to the channel selection page on the Roku 2 or crashes the system entirely on the Roku3. Roku says it’s not their problem and to contact DTN. DTN told me a couple months ago they’re aware of the problem and that it will be fixed soon. Their definition of “soon” appears to be different than mine.

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