uploads///Telecom ATT Q Digitalsmiths Video Trend Report

Why Is AT&T Positive about DIRECTV Now?

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AT&T’s DIRECTV Now

AT&T’s (T) DIRECTV Now over-the-top (or OTT) service is a new video streaming service that was launched in November 2016 with a headline promotional offer for its Go Big package ($35 per month for 100+ channels), which ended on January 9, 2017. 

With zero-rating, promotional pricing of DIRECTV Now saw strong initial adoption.

During the Deutsche Bank Media, Internet and Telecom Conference on March 8, 2017, John Stephens, AT&T’s chief financial officer, spoke about the growth in DIRECTV Now. Stephens said that AT&T reported ~200,000 video net additions, driven entirely by DIRECTV Now, in the service’s first month.

He also said, “We have moved off those promotional prices and moved to more run rate prices which give us the opportunity to bundle wireless, to get into new customer areas, multiple dwelling units, some of the youth market. That’s proven really positive.”

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OTT video service: Growth potential

The introduction of AT&T’s DIRECTV Now OTT video service in 4Q16 could help AT&T to diversify away from its US wireless business. The OTT video streaming service has huge growth potential. Users are subscribing to OTT services in greater numbers than ever before, mainly due to the high monthly bills they’re paying for cable and satellite TV.

A 4Q16 report from Digitalsmiths suggests that ~35.0% of users pay more than $100 every month to their pay-TV providers, as we can see in the above graph.

AT&T’s other competitors in the video streaming space are Netflix (NFLX), Amazon (AMZN), Verizon’s (VZ) Go90, and Alphabet’s (GOOGL) YouTube.

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