Is DIRECTV on the decline?
DIRECTV was the pioneer satellite TV provider for quite a long time in the United States where it gave its customers hundreds of channels, exclusive sporting packages, and premium movie channels among other services. But, in the last few years, indications of this seemed to have surfaced that the cable operator has lost its former strength to competitors and shifting customers’ preferences.
The biggest loss, however, occurred in 2014, when AT&T announced it was to acquire DIRECTV in a deal totaling $48.5 billion. Within a year of operations, AT&T started implementing measures that proved unsavory to its clientele such as offering contracts and increasing charges that were inconvenient to customers. Furthermore, AT&T expanded in the streaming market by launching DIRECTV Now (which was renamed to AT&T Internet TV Now), which was a drastically different service from the regular cable replacement offering as it was more in line with the Sling TV rather than the DIRECTV satellite service for which the brand was initially known. This change of paradigm away from the satellite was the cause of complaints among the direct user base.
After the acquisition by AT&T, the number of subscribers to the DirecTV service has been decreasing in millions. The satellite TV subscribers, according to their account, have dropped to about 1.2 million in 2019 from about 19 million in 2018 and 17.7 million in 2019. These quarterly earnings reports persist to manifest a concerning trend of decline in DIRECTV satellite customers as people seem to be gravitating more and more towards on-demand streaming.
The increase in cord-cutting over the past decade has also affected DIRECTV especially due to regulation. With internet speed increasing progressively across the country, people have shifted more towards the online streaming of the TV shows available on Netflix, Hulu, Disney+, and other such platforms. Consumers are fleeing costly cable and satellite TV packages in droves now that they have better options that give them more choices at a lower cost. One thing that has been evident about Direct TV is that they have not been offering competitive streaming packages which has seen them become the focus of cord-cutters who are determined to cut down on their expenses.
However, the cost of the basic packages, as well as the required subscription period that directly translates to the prices of the DIRECTV varies and is still rather high for today’s consumer. Another package is their CHOICE package which has more than 150+ channels and costs $90 for the first year before the price is hiked. Customers also have to commit to a 24-month agreement with high limits on early termination fees. However, as the popularity of streaming TV increases, commitments, and expensive offers may send potential DIRECTV customers to competitors.
DIRECTV has always been able to control the programming of live sports that are considered premium, however, even in this particular market, their grip is loosening. One of their most celebrated services has been their NFL Sunday Ticket package that allows the watching of all NFL games. However, current information shows that the DIRECTV NFL deal is not going to get a renewal when it expires at the end of the 2023 season. Tech and streaming companies such as Amazon Prime Video, Apple TV, and YouTube TV are all expected to go all out and place hefty bids to have exclusive rights or partial control of NFL games broadcast rights. NFL Sunday Ticket is another big loss that DIRECTV is likely to suffer due to the lift of exclusivity.
Another piece of luck for DIRECTV is that live sports is one of the last few categories of content, that consumers still prefer to watch live rather than on a DVR or streaming video on demand. Thus, even though they may lose market share on the national level, they still can count on bringing a sufficient number of loyal sports fans across the country to remain profitable even on a smaller scale. It therefore means that DirecTV may be forced to find other ways to offer more value-added services such as bundles with other streaming services, for instance, to reverse the trend in the long run.
However, the actions of DIRECTV come to a fork in the road after years as America’s leading satellite television outfit. The competition in the territory of television is vast and has developed rather rapidly, and now it is Directv’s largest test to adjust to all of these streaming entrants. This precludes the situation wherein DIRECTV goes completely extinct given their stronghold at premium live sporting events. But their days as king of TV in America appear to be rapidly counting down unless or until they find ways of adapting themselves to the new technologies and changing patterns of TV usage. The next 5 years will define whether DIRECTV will rise from the abyss or continue to lose the battle as streaming services gain the upper hand.
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