Published on October 24th, 2018 | by Brad Gibson2
AT&T rethinking DirecTV Now channel packages eyeing skinnier, cheaper bundles
Following disappointing third-quarter new subscriber numbers, AT&T is re-examining its channel packages on DirecTV Now to keep rates low as programming costs rise.
AT&T CFO John Stephens said Wednesday during a third-quarter earnings conference call that the company is dealing with continually growing programming costs for DirecTV Now making it difficult to keep prices low that are passed on to consumers.
“It’s also about what customers want, and many want smaller, value-based video packages,” Stephens said.
DirecTV Now currently offers four different pricing packages from 65 channels for $40 a month to more than 125 channels for $75. Separately, AT&T offers the streaming service WatchTV, a barebones 30-channel service for $15 a month and free to AT&T’s Unlimited & More wireless subscribers.
It’s unclear what other types pricing and channel lineup combinations AT&T might offer, and Stephens gave no clues during Wednesday’s conference call.
John Donovan, CEO of Communications at AT&T, said that DirecTV Now will be scaling back its promotional efforts and special pricing, similar to the free Apple TV 4K deal it offered for nine months and that ended in September.
“We made the strategic decision to rationalize our promotions and special offers for DirecTV Now,” said Donovan. “We’re taking a more tailored, data-driven approach. Specifically, we focused on reducing promotions for low value, high churn customers.”
Donovan said DirecTV Now is trying to retain customers, many of whom are currently moving between various services like Sling TV, Fubo TV, and Hulu with Live TV, all of whom offer no contracts and month-to-month billing which makes it easy for customers to switch based on inexpensive or even free promotional offers.
Donovan commented AT&T has learned a lot from its DirecTV Now customers related to price and demand, calling it “a tale of two cities.”
“It’s folks that are just jumping from promotion to promotion and really spinning in the industry between us, Hulu Live, YouTube TV,” Donovan said. “For example, we see customer behavior evolving somewhat like Wireless, with some customers seasonally shopping for shows,” he said.
“We’re evaluating our channel lineups and taking a fresh look at how we can align content cost with the price,” he said. “It’s also about what customers want. And many want smaller, value-based video packages.”
Stephens also said AT&T is “being updated to increase its simplicity and further differentiate the service,” but gave no details.
DirecTV Now launched in November 2016 using the Apple TV app. The service offers an entry-level package price of $40 per month for over 60 channels.