Is directv now losing customers?
DirecTV Now is a streaming TV service that was launched by AT&T Internet in November 2016, as a cheaper service than cable or satellite television. DirecTV Now which offers favorite television networks including ESPN, CNN, HGTV, and many others delivered over the internet service to connected devices, experienced a rapid increase in subscriptions at the start. Negatively the reports of the current year indicate that the growth rate is declining and the number of subscribers is also coming down. Is DirecTV Now losing customers and if yes, in what way?
The initial development: In the beginning, the launch and initial growth of the business.
DirecTV Now began in November 2016, and within a short time, it experienced a significant surge due to some incredible promotional offers. The company offered the service at a reduced rate for a week at $35, which was quite costly compared to the normal price. This made it possible for DirecTV Now to attract over 200,000 people as its subscribers within the first month of its launch. Nevertheless, AT&T continued to grow through 2017, and stream service was actively promoted, even if this caused the decline in the DirecTV satellite business.
However, promotional prices were not sustainable in the long run as the company needed to make enough profits to sustain the costs. As for DirecTV Now, the price for the lowest tier has risen to $40 per month in early 2018 and to $50 per month in mid-2018. Similarly, concerns around the technical quality of videos and issues with the features caused some amount of disappointment from the customers. Although the growth was still positive, it began to indicate that the increase was going to be at a slower rate.
Recent Declines
In 2019, the subscriber growth of DirecTV Now itself suffered a setback. Just in the first quarter of 2019, the service lost 267,000 subscribers; it could barely retain 16% of the newly added customers in Q4 2018. The same is evident in the Q2 2019 earnings wherein the company continued to post another net loss of 168,000 subscribers.
During the Q4 2017 earnings call, AT&T admitted that DirecTV Now is still hemorrhaging subscribers, but stated that this rate is expected due to the introduction of new price hikes and the abolishment of offers. However, with the onset of 2017, DirecTV Now’s packages started to become expensive, costing between $50-70 per month as this was not competitive anymore. Old subscribers, who signed up for the service initially for $35 per month, resented being charged 80% to 100% more at the end of their subscription period. Other sweeteners, which were earlier advertised by the company like AT&T such as DirecTV Now device offers were also pulled which was another customer lure.
More Competition
However, the problem does not end with the price hikes, which are a big blow to DirecTV Now in terms of subscriber acquisition. This service also found itself competing with more players than ever before in the streaming television market. Hulu Live TV, YouTube TV, and Sling TV have emerged to encourage cord-cutters with their own channels and features list.
That being said, DirecTV Now does have some advantages in some areas – it has a slightly lower regular price or at least offers this service at a lower price and/or has certain regional sports networks. But other services have come to offer opportunities concerning discounts and promotions which make their prices equal to or even less than DirecTV Now. Offerings such as YouTube TV are usually at the apex of customer satisfaction indices because of their interfaces, reliability, channel arrays, and more than adequate DVR capacities as opposed to competitors.
What Happens Next
Will DirecTV Now be able to bounce back from its latest dip in its subscribers list? It is still being incorporated by AT&T as one of the strategies when it comes to streaming videos. Future developments may enable the streaming service to better challenge rivals like YouTube TV and Hulu Live. There are also plans for a new user interface scheduled to roll out in late 2019 that will enhance navigation and DVR control. Another proof of investment in the same direction is AT&T TV which is planned for launch as the new version of DirecTV Now.
However, bringing the loss of subscribers in the opposite direction will not only need to be done through an interface or rebranding. Which have remained a challenge, is the ability to retain promotional subscribers, who do not want to renew their subscriptions at higher rates. And as pricing is lowered, there is a danger of weaker profits. There are some specific areas highlighted that could warrant a strategic action plan to add value for sports consumers: increasing incremental regional sports network carriage; more systematically adding missing local TV affiliates; and revamping platform stability and interactivity to woo back customers ceded to competitors.
The streaming TV market is still growing with new entrants like Disney+ by the end of 2019 and the existing providers continuing to change the package and its costs every month. As such, even though DirecTV Now has cause for concern when it comes to subscriber growth, they can still boast of a streaming TV first-mover advantage. As long as AT&T which is a parent company of DirecTV Now continues enhancing its core service, it can still make a comeback before other drastic transformations in the Pay-TV market.
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