DIRECTV Now, DIRECTV Mobile, and DIRECTV Preview
During the Deutsche Bank Media, Internet, & Telecom Conference held on March 9, 2016, John J. Stephens, AT&T’s (T) chief financial officer and executive vice president, discussed new offerings targeting non-pay-TV households in the United States. Beginning in 4Q16, AT&T plans to initiate the three services—DIRECTV Now, DIRECTV Mobile, and DIRECTV Preview.
According to Stephens, “there is about 20 million homes that are unattached, that don’t have a video service today. So if we can come-up with some of our new DTV Now or DTV Mobile, of DTV Preview type products and get an opportunity to penetrate those, we can – we have revenue opportunities at still significant levels, as well as a really good partnership with our content providers.” He also mentioned that “those revenues opportunities are not only on the service revenue side, but also on advertising and so forth. So that gets us optimistic.”
Non-pay-TV households in the United States
The market that AT&T is targeting with DIRECTV (DTV) Now, DIRECTV Mobile, and DIRECTV Preview is expected to expand in the medium term in the United States. According to a report by eMarketer, and as you can see in the above bar chart, non-pay-TV households in the United States are expected to increase from ~20.8 million in 2015 to ~28.1 million in 2019.
For diversified exposure to select telecommunications players in the United States, you may consider investing in the iShares Russell 1000 Value ETF (IWD). The ETF had a total of ~2.3% in AT&T (T), CenturyLink (CTL), Level 3 Communications (LVLT), Verizon (VZ), and T-Mobile (TMUS) at the end of December 2015.