Commentary

AT&T's DirecTV Now Set To Debut With Four Packages

AT&T yesterday dished out the details on its DirecTV Now streaming service that will launch tomorrow with a promotional basic package of 60 channels for $35 a month. Purchasers can stream on two devices at once using their own broadband or wireless connection. Subscribers to AT&T wireless services will not be hit with data usage charges after they hit a prescribed limit.

“AT&T expects DirecTV Now to appeal to the growing market of consumers shaving their pay-TV services or eschewing them all together, says John Stankey, CEO of AT&T's entertainment group. DirecTV Now allows the telecommunications giant to ‘address a new audience,’ he said,” writes Mike Snider for USA Today. “Rather than require consumers to sign long-term contracts and buy or rent pay-TV boxes, DirecTV Now is like subscribing to an app, Stankey says.”

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“It’s really important to understand, this is the foundation for how we’re going to do things in the future,” Stankey also said. “For the first time in our history, we have control of our full stack.”

DirecTV Now has “programming agreements with nearly all major networks with the exception of CBS and Showtime; negotiations with those companies remain ongoing,” writes Chris Welch for The Verge.

The basic $35 package includes local ABC, NBC and Fox stations, as well as cable stalwarts such as ESPN, Fox News Channel, CNN, Nickelodeon, MSNBC, CNBC, Disney Channel, TNT, TBS, USA, HGTV, AMC, FX, A&E, Comedy Central, MTV, Discovery, Fox Sports 1, Univision and Syfy.

Initially, there are four monthly packages: “Live a Little” ($35 for 60+ channels); “Just Right” ($50 for 80+ channels); “Go Big”($60 for 100+ channels) and “Gotta Have It” ($70 for 120+ channels). HBOand Cinemaxcan be added to any package for an additional $5 each per month.

“Although AT&T chief executive Randall Stephenson initially promised that that level of access would cost $35, the company said Monday that it will be a promotional offer,” reports Brian Fung for the Washington Post. “After some amount of time — AT&T declined to say how long — the 100-channel package will rise in price to $60 a month, in line with what many analysts said will be necessary for AT&T to make a profit on the new app.”

“The laws of financial gravity are inescapable,” Roger Entner, a wireless analyst at Recon Analytics, tells Fung. That said, AT&T promised to increase the "Live a Little" price only by the amount of “reasonable” programming increases for customers who sign up for the offer now.

“In what was setting up to be a looming pay-TV price war, AT&T may just have blinked,” observes the Wall Street Journal’s Miriam Gottfried in a “Heard on the Street” column. 

“AT&T has a lot riding on DirecTV Now, in part because of its desire to appear customer-friendly to regulators reviewing its Time Warner deal. That suggests it will heavily market the service, but without the rock-bottom price, the sting is gone for cable,” she concludes.

There is no capability to record or pause programs for now but there will be a cloud DVR offering next year, AT&T says.

“AT&T aims to initially entice new subscribers by offering free streaming players to those who commit to paid plans. Those who sign up for three months will get a free Apple TV, while those who pay for one month will receive a free Amazon Fire TV Stick,” report Sarah Perez and Anthony Ha for TechCrunch.

It also hopes to entice customers to its wireless service with the proviso that subscribers can stream without tapping into their wireless data plans. But the Federal Communication Commission “has already gotten involved here, having sent AT&T a letter challenging its use of ‘zero rating,’ as this is called,” points out TechCrunch’s Perez. 

One other lure: “Aiming to differentiate the service from conventional pay TV, AT&T is playing up exclusive content” such as a Taylor Swift Now channel that “will be devoted to the videos, concert performances, behind-the-scenes footage, and more from Swift’s archives,” reports Todd Spangler for Variety. And a Reese Witherspoon venture called “Hello Sunshine” is set to launch as a VOD channel on DirecTV Now by the middle of next year.

AT&T also outlined two other streaming services, FreeVIEW and Fullscreen, in its release yesterday. The former offers “unique and exclusive” ad-supported content from from Audience Network, Otter Media properties and other channels on DirectTV Now. The latter has “more than 1,500 hours of ad-free premium scripted and unscripted” programming for $5.95 a month. It is free for a year for AT&T Mobility customers.

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