AT&T Sees Slow Gains with DirecTV Now, While Satellite Biz Loses 147K Subs in Q4

DirecTV Now

DALLAS – AT&T reports middling gains from its streaming digital video platform business, DirectTV Now. The virtual MVPD (vMVPD) service surpassed the 1.2 million-subscriber mark by the end of 2017, while its legacy satellite and fiber-based video platforms continued to lose ground.

During 2017’s fourth quarter, DirectTV Now added 368,000 subscribers, gaining business from cord cutters and cord nevers. But its DirecTV's satellite-TV business lost 147,000 subscribers, while the U-verse fiber-optic service lost 60,000 video customers. Randall Stephenson, CEO of AT&T, brushed off the losses saying, “Since the day we bought DirecTV, we assumed that traditional linear video would be in a declining mode.”

He also talked up over-the-top (OTT), saying it and “the ability to consume video on mobile devices, we believe this would be the trend. ... As traditional linear declines, our traditional linear video will be repurposed.” He didn’t offer further details.

AT&T also announced plans to launch a next generation of its over-the-top (OTT) platform this year, which will include a cloud DVR and a third concurrent stream for DirecTV Now. 

The company also unveiled a “home-centric” version of the OTT service, described as “a very small, inexpensive streaming device plugged into your TV and then you connect it to any broadband service.”

As AT&T expands its OTT offerings, it is also building its advertising capabilities.

“Advertisers have made it really clear to us that they're looking for a trusted option in premium video advertising, looking for an alternative to the current digital ad duopoly that can bring advertisers scale and deliver results that are transparent and brand safe,” Stephenson said.

“Once [the merger with] Time Warner closes, we'll be well-positioned to be that alternative. We think the entire industry, advertisers, publishers, and consumers, are more than ready for this alternative," he added. "And with Time Warner, we believe we'll have the right data, the right content and the right talent to build an automated advertising platform that can transform premium video and TV advertising.”

AT&T’s entertainment revenues in Q4 – which includes all DirecTV platforms – sank 4 percent, to $12.7 billion. In calendar year 2017, revenues slipped 1 percent to $50.7 billion.