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DirecTV Now to Cost $35 Monthly

25 Oct, 2016 By: Erik Gruenwedel



AT&T’s pending online TV service, DirecTV Now, will bow next month with a $35 monthly subscription fee, CEO Randall Stephenson said at an investor event.

Speaking Oct. 25 at the 2016 WSJDLive confab in Laguna Beach, Calif., Stephenson for the first time revealed the price for the Web TV service promising access to 100 channels – exponentially more than Dish Network’s Sling TV and Charter’s Spectrum TV Plus.

“It’s clear what customers want. They want premium content in a mobile environment. Our goal is to drive prices down,” Stephenson said.

The announcement comes just days after the telecom agreed to buy Time Warner, including Warner Bros., Turner and HBO, for $85 billion.

With the deal already generating heightened scrutiny in an election year, offering a populist-priced online TV service (less expensive than Sony PlayStation Vue and most pay-TV bundles) is one way to curry public support.

Indeed, DirecTV Now will at first be offered via traditional broadband networks, but Stephenson envisions distributing the service through 5G wireless networks the telecom will begin rolling out in 2018.

“I border on evangelical about it,” he said, as reported by Wired.com.

Analyst firm MoffettNathanson believes the service could generate about 11 million subscribers, of which 2 million would be cannibalized from DirecTV, and the remaining 9 million generated from competing linear TV services and the “mythical and oft-hailed cord-cutter/cord-never cohort.”

The research firm contends AT&T will earn about $1 in gross margin per subscriber, which it said translates to a loss when factoring in subscriber acquisition cost, customer service, transport, computing, and storage costs.

“AT&T’s … $35 starting price point for DirecTV Now raises far more questions than it answers.  Like running with scissors, it probably won’t be life threatening – the number of subscribers they will cannibalize won’t be large enough to inflict a mortal wound to their own business, and the single stream limitation and inherent drawbacks of an OTT service will similarly limit the damage to the pay-TV ecosystem overall. Still, we believe DirecTV is playing a dangerous game.”
 

 


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