Why Is AT&T Struggling to Grow Its Pay-TV Subscribers?

Pay-TV service providers such as AT&T (T) are facing declines in their US pay-TV subscriber bases due to cord cutting. Consumers nowadays tend to prefer OTT (over-the-top) video streaming services instead of subscriptions to satellite TV offerings. 

OTT service providers such as Amazon Prime (AMZN) and Netflix (NFLX) are some of the more established players in the video streaming market.

AT&T reported a loss of 403,000 satellite TV customers, more than its expectation of 328,000, in the fourth quarter. Its total traditional customer (satellite and U-verse TV) losses were 391,000 in the fourth quarter, bringing the decline to 5% for the year. The company has been losing its satellite TV customers for several quarters now. Other traditional pay-TV companies Comcast (CMCSA) and Charter Communications (CHTR) are also losing residential video customers. At the end of the fourth quarter, Comcast had lost 19,000 residential video customers, while Charter had lost 36,000 residential video customers.

Amid a declining pay-TV subscriber base, AT&T is focusing on its streaming service offering, DIRECTV NOW, to win customers. However, in the fourth quarter, AT&T lost 267,000 DIRECTV NOW customers compared to its net addition of 49,000 subscribers in the previous quarter, after its introductory offer came to an end.