How YouTube TV Could Affect AT&T’s DIRECTV Now

DIRECTV Now

AT&T’s (T) DIRECTV Now was launched late last in 2016 to much fanfare, and its promotional pricing saw strong initial adoption. AT&T reported ~200,000 video net additions driven entirely by DIRECTV Now in the service’s first month. 

AT&T is increasingly focusing on the DIRECTV Now service, as its pay-TV business is facing subscriber losses.

How YouTube TV Could Affect AT&T’s DIRECTV Now

In 4Q16, AT&T gained 235,000 satellite video subscribers and lost 262,000 U-Verse video subscribers, a net loss of US pay-TV subscribers, as we can see in the chart above. Over the last few quarters, AT&T has been experiencing subscriber losses in the US pay-TV market. It’s attributed this trend in customer acquisitions in its video component to its focus on satellite TV customers following its acquisition of DIRECTV.

However, it’s been a rocky launch for DIRECTV Now amid subscriber complaints. Despite numerous media reports documenting the poor quality of the fledgling DIRECTV Now platform, AT&T remains confident that it will rectify the issues.

YouTube TV versus AT&T’s DirecTV Now

It remains to be seen whether YouTube TV will face the same teething troubles as DIRECTV Now. Considering that Alphabet (GOOG) intends to launch YouTube TV initially in some major markets in the United States (SPY), there’s the possibility that YouTube could face some initial problems when scaling up.

If these technical problems do crop up, YouTube TV’s popularity could be decided on how quickly Google is able to respond to them.