Q. I read this morning that DIRECTV Now just lost a whole bunch of subscribers. Why is that? I thought everyone is cutting the cord and getting live streaming services. Not true? — Melanie, San Jose.
Melanie, not true. While cord-cutting is on the rise, the number of people who have dropped their cable or satellite service is still relatively small in comparison to those who still subscribe. In the last decade, cable and satellite services have lost roughly a net 10-15 percent of their video customer base, which was around 100 million before the defections.
That’s a lot of people cutting the cord, but it’s far from a majority, or even the definition of a mass trend.
But to your other point: The live streaming services, such as Sling TV, DIRECTV Now, PlayStation Vue, Hulu Live and YouTube TV, have accumulated several million subscribers in the last 3 or four years, which is impressive. However, they were able to amass those numbers through dirt-cheap, financially-unsound programming packages (For instance, Sling started with a $20 a month plan; it’s now $25 a month.), and a host of promotional giveaways and price breaks (on top of the already cut-rate plans!)
For most of 2017, and parts of 2018, DIRECTV Now, which is owned by AT&T, offered new customers an offer they couldn’t refuse: $10 a month for its basic plan for the first three months.
$10 a month! For 60 plus channels! What a deal!
Obviously, DIRECTV Now could not sustain that price without losing a sizable portion of AT&T’s largesse so it finally stopped the offer late last year. The live streamer also raised the price of its base plan from $35 a month to $40 a month in the summer of 2018.
The two actions clearly, and severely, hurt their subscription effort, which resulted in a 267,000 net subscriber loss for the fourth quarter of last year, as reported today by AT&T.
DIRECTV Now still has roughly 1.6 million subscribers. But live streaming’s ongoing technical issues (buffering, picture freezing, login issues, etc.) and lineup holes (favorite channels often missing in packages) will make it difficult for DIRECTV Now to resume its once-meteoric growth without going back to those cheap promo prices.
Without the dirt-cheap prices, and attractive giveaways, such as free Apple TV devices, the live streaming business could be a house of cards.
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— Phillip Swann
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