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Deeper Dive—Goodbye, AT&T TV. Hello, DirecTV Stream - FierceVideo

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AT&T TV—which used to be DirecTV Now before becoming AT&T TV Now—is now officially DirecTV Stream, the internet-delivered component of the new standalone DirecTV.

It’s the latest development in what has been a long and often confusing road for DirecTV since it was acquired by AT&T in 2015. At the time, former AT&T CEO Randall Stephenson said the $48.5 billion deal was all about “giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service.”

AT&T launched DirecTV Now in late 2016 and after a strong start, the virtual MVPD grew to 1.8 million subscribers by the end of the second quarter of 2018. However, by the time the fourth quarter of 2018 arrived, the conversation had shifted to how the company’s focus on profitability and reduced promotions lead to video subscriber losses at DirecTV Now while satellite customer attrition was also accelerating.

By the end of 2020, AT&T TV Now was at 656,000 subscribers—down 29.2% year over year—after losing another 270,000 customers during the fourth quarter. Shortly after reporting its end of year results, AT&T announced a deal with TPG Capital to spin off DirecTV, U-verse and AT&T TV into a new company called DirecTV. That deal was finalized earlier this month and today, AT&T TV is being officially reintroduced as DirecTV Stream through a TV advertising campaign running into early 2022 and featuring Serena Williams as Wonder Woman.

“The TV campaign is a call to consumers to un-complicate their entertainment lives, and many of the other campaign elements are designed to connect with fans in a new and fun way to showcase the best of live and on-demand,” said Vince Torres, chief marketing officer at DirecTV.

With a big marketing push behind it, DirecTV Stream could perhaps reemerge as a competitor for YouTube TV and Hulu + Live TV along with many traditional pay TV operators.

“DirecTV Stream competes with traditional pay TV services on the high end and lower priced vMVPD services on the low end. It is a good option for consumers that want a full featured pay TV service but that don’t like the options among traditional providers where they live,” said Brett Sappington, vice president at media analyst firm Interpret.

Interpret’s latest VideoWatch research, which surveyed 9,000 U.S. consumers, found that as of early first quarter 2021, 10% of pay TV non-subscribers plan to subscribe to a traditional pay TV service and 15% plan to subscribe to a vMVPD service, while 75% have no plans to subscribe in the future.

Pay TV penetration rates have fallen steadily over the past few years, according to Sarah Henschel, principal analyst for media and entertainment at research firm Omdia, who put the figure at around 61% for the U.S. at the end of 2020. That’s certainly reflected in the steady subscriber declines for major U.S. operators, who collectively dropped another 1.2 million customers in the second quarter, according to Leichtman Research Group.

However, if you ask fuboTV CEO David Gandler, who runs one of the few vMVPDs reporting regular subscriber growth, the U.S. vMVPD space could grow to between 40 million and 50 million subscribers in the next five years. With a clear message and a quality product, DirecTV Stream could be poised to grab a substantial chunk of that potential market.

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Deeper Dive—Goodbye, AT&T TV. Hello, DirecTV Stream - FierceVideo
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