Q. I can’t understand what AT&T is doing with DIRECTV Now. They are dropping channels, raising prices, and they are losing subscribers (including me!). What’s the plan here? Are they looking to get rid of it? — Brian, New York.
Brian, you’re right. AT&T, which owns DIRECTV Now, seems to have no clue how to make DIRECTV Now a profitable live streaming service, if there can be such a thing. The telco giant recently raised DIRECTV Now’s base price from $40 a month to $50 a month, dropped a bunch of channels from its two plans for new customers to save costs, and recently announced that it will no longer carry Nick Jr. and the NFL Network in DIRECTV Now’s lineup.
By reducing channels, and increasing subscription costs, AT&T is hopeful that DIRECTV Now will begin to show a profit, albeit a small one.
But there are very few companies on the planet that have ever survived by removing services and raising prices at the same time. And DIRECTV Now, which lost a net of 267,000 subscribers in the 2018 fourth quarter, could be headed for some staggering loss numbers in the coming months.
If that happens, it would not surprise me if AT&T decides to close DIRECTV Now by year’s end.
After all, the telco is preparing to launch a new Netflix-like streaming service featuring HBO, and programming from channels such as TNT and TBS. In addition, AT&T plans to roll out a streaming version of its satellite TV service, DIRECTV, in the coming months.
So If DIRECTV Now continues to leak subscribers, and amass financial losses, what would be the point of continuing it? AT&T could instead focus on making the two new streaming entries profitable rather than trying to force the issue with DIRECTV Now.
(Why would the streaming edition of DIRECTV make money? you ask, when DIRECTV Now can’t? For the first two years of DIRECTV Now, AT&T offered it for as little as $10 a month for the first three months. After doing that for so long, it’s now difficult to get DIRECTV Now subscribers to pay higher monthly fees. In contrast, DIRECTV’s subscribers are used to paying up to $100 a month for its satellite lineup; it would be easier to get those customers to pay between $70-$100 a month for a streaming version.)
Beyond corporate pride, I can’t see any reason for continuing DIRECTV Now after the two new services are in place.
So it will be interesting to watch DIRECTV Now’s next two or three financial reports (2019, quarters one, two and three). (Update: AT&T revealed on April 24 that Directv Now lost another 83,000 net subs in the first quarter.) Will the live streamer lose even more subscribers, perhaps up to one million, which could take its net subscriber number to under one million? If so, the fourth quarter could be DIRECTV Now’s last.
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— Phillip Swann