AT&T's Streaming Headache: Why Is DirecTV Now Losing Subscribers?

[Y2kTheNewOldies]

https://www.hollywoodreporter.com/n...why-is-directv-now-losing-subscribers-1183112

Part of this factors in AT&T's role in taking over Warner Media

The service was supposed to be a high-growth live TV offering, but a sudden drop in subscribers is causing alarm as traditional cable companies scramble to offer Netflix-like streamers.
Comcast, Charter and Verizon quarterly subscriber figures are coming in slightly better than Wall Street had expected. But in an ominous sign for AT&T's push to become an entertainment powerhouse — it spent $85 billion to acquire TimeWarner in 2018, after all — satellite television provider DirecTV has come up short, with even its supposedly high-growth skinny bundle streamer, DirecTV Now, losing subs.

Launched with fanfare in late 2016, the streaming service with up to 125 channels of live TV grew its subscribers to 1.86 million as of Sept. 30, but in the fourth quarter recorded its first subscriber drop ever. Analysts were stunned by the loss of 267,000 streaming users (on top of a loss of 403,000 at the traditional DirecTV satellite service) reported Jan. 30, given that the consensus forecast was for a 19,000-sub drop after AT&T management had late in the year forecast a decline, citing the need to end promotions that attracted low-end customers.

"In the wake of a price increase in July, the growth of their DirecTV Now subscriber base slowed sharply. In the fourth quarter, it collapsed," says MoffettNathanson analyst Craig Moffett. "Nobody expected this."

AT&T chairman and CEO Randall Stephenson explained on a Jan. 30 conference call that "there was a customer segment at the low end, very promotional pricing, who are not engaging on the product." Excluding these 500,000 users who paid only $10 a month, he said the "remaining customer base is growing." AT&T said eliminating these low-end customers boosted average revenue per streaming user in the fourth quarter by $10 from the third.

 

[FreddyE1977]

In other words they finally found a price point that people were unwilling to pay.

 

[TheBigA]

Add this to the disaster that was U-verse, and there are some real problems.

 

[CTListener]

Add this to the disaster that was U-verse, and there are some real problems.

Maybe it's better in the long run to offer s new service free for a limited period, then start charging the full price, rather than going with a ridiculously low promotional price like $10. The person who agrees to a free trial period knows that he or she will have to decide when it ends whether the service is worth paying for, period, whereas the person who signs up for a $10/month plan starts asking, "Is this service really worth X dollars more than I'm already paying?" When there's no price to compare the full price to, you eliminate that element of the decision.

I am currently paying $5 a month for ESPN+, largely for its soccer, boxing, NHL and college football and hockey coverage. If ESPN were to raise the price to $25 without offering more programming I like, I'd have serious thoughts about renewing. But if I were on a month-long free trial for a service I know going in was going to cost me $25 a month, I'd be much more likely to sign up.