A Clarion Call to Bring Back Cable TV Audiences

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AT&T®, preparing an endeavor to offset reductions in its standard pay TV business, is planning to trial a streaming STB and service in 2019’s first half. The set top box or the wireless device is aimed at enhancing the profitability of AT&T’s TV bundles.

It was reported that the set-top box runs Android TV platform, and was described as one that supports 4K definition video, which bodes well for those who are looking for streaming bundles or best cable deals.

“Over time, it should lower our acquisition cost of our premium video service,” said AT&T® Communications’ CEO, John Donovan, about the device and service during the Dallas-based telecommunications company’s third quarter earnings call. According to him, tests of the wireless device as well as service are set to have “measured roll out”.

Donovan compared the device to AT&T® Watch TV, a streaming service of the fastest internet provider. He said that like AT&T® Watch TV, they “expect this service to be EBITDA positive”. For an uninitiated, that is a measure of the operating performance of a company. However, AT&T® officials declined to give more information on the product or the content package that will be offered to customers through it.

Earlier this year, John Donovan described their plans to hold a trial in 2018 for a “streaming product that will give the full DIRECTV® experience over any broadband, ours or competitors.” Now this move comes as the Telco’s pay TV business keeps dwindling – and the OTT package of DIRECTV NOW® fails to compensate for losses due to cord cutting.

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For the third quarter, it lost 346,000 DIRECTV® satellite and U-VERSE® video subscribers, and added 49,000 new subs to DIRECTV NOW®. The streaming TV service of AT&T® stood at 1.86 million subs at the end of Q3. In July 2018, it raised its bundles’ price by $5 a month. Donovan said to analysts that with the hike in price, they “expected a far worse outcome”.

As part of AT&T’s efforts to increase DIRECTV NOW’s profitability, he said the company is in the process of “evaluating our channel lineups and taking a fresh look at how we can align content cost with the price,” noting that several subscribers “want smaller, value-based video packages”.

As per Donovan, the AT&T® Entertainment Group has also moved to “rationalize our promotions and special offers” for the streaming service, focusing on dropping discount offers for “low-value, high-churn customers”. Besides, he noted, a two-year long price-lock promotion for U-VERSE® and DIRECTV® is set to end, which will give “significant margin relief through 2019”.

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