T&T has been slowly building a new streaming TV service, AT&T TV, and the product is still in the testing phase. But AT&T expects it will ramp up quickly after launch.
AT&T said AT&T TV will launch in select markets by the end of the third quarter before expanding to nationwide availability in early 2020.
For AT&T, the service is not so much about replacing DirecTV satellite service but creating new addressable markets while reducing customer acquisition costs related to satellite dish installations and service setup. Last month, AT&T CEO Randall Stephenson said the lower customer acquisition costs will allow AT&T to offset rising programming costs so it can decrease price points for AT&T TV. For example, he pointed toward AT&T’s current carriage dispute with Nexstar Media, which he said asked for a 100% increase in broadcast television retransmission fees in its initial renewal offer.
“We’ve got to find a way to get the cost curve down on this product so we can keep people into the product for a longer-term basis,” Stephenson said.
AT&T is pitching AT&T TV as improved user experience with a modern user interface, better search capabilities, and in-app support. The company is also testing a proprietary Android TV set-top box that will accompany the service.
For continuity sake, AT&T is changing the name of DirecTV Now, one of its other multichannel streaming services, to AT&T TV Now. But the name change could also be aimed toward delineating (and maybe disassociating) AT&T’s streaming TV operations from its struggling satellite TV business.
DirecTV contributed to AT&T losing 778,000 traditional TV subscribers in the second quarter. The company attributed those elevated losses to increased churn resulting from DirecTV customers coming off two-year promotional price locks. The company said that the amount of traditional pay-TV subscribers on promo pricing declined by 600,000 during the second quarter, leaving another 1 million still on promo pricing. AT&T said that means video subscriber churn will remain high throughout the rest of 2019.