AT&T made a play for the growing streaming TV market, announcing the launch of DirecTV Now, a cable-like over-the-top (OTT) live streaming service which will offer DirecTV’s satellite channels to subscribers.
AT&T’s move into streaming TV makes sense as more and more consumers are watching digital content on their TVs, laptops and mobile devices through OTT services. eMarketer estimates that there will be 188.1 million OTT video service users in 2016, rising to 206.1 million in 2020. YouTube is included in eMarketer’s estimates. Because its audience is so large and well-established, it makes the growth of the entire category appear to be less dramatic.
Many OTT viewers have increased their digital TV and video content consumption after cutting the cord to cable TV. eMarketer expects the number of cord-cutters (and cord-nevers—those who never have had pay TV) to rise substantially over the next few years, growing from 17.8% to 22.6% of the US adult population between 2016 and 2019. AT&T’s move into the live-TV streaming space is a new way to offer potential viewers access to traditional live TV content that they would typically view via cable subscription.
AT&T is looking to attract subscribers with a variety of deals, including an introductory pricing option of $35 a month for a package of more than 100 channels. AT&T is also including a fourth-generation Apple TV to customers who sign up for 3 months of pre-paid DirecTV Now service, and an Amazon Fire TV Stick with 1 month of pre-paid service. Additionally, AT&T mobile customers will be able to stream the content via the DirecTV Now app without worrying about monthly data limits.
While these offers may be tempting for some customers, it may not be a deal-driver for many, said eMarketer analyst Paul Verna. “Price is one of the factors people take into account when choosing a pay TV service, whether a cable- or satellite-delivered one or a digital streaming package,” he said. “However, consumers are also picky about what shows, movies, sports, live TV, and local channels they watch. In that regard, they tend to select services based on how closely they match their wish lists, as opposed to simply choosing on the basis of cost.”
DirecTV Now’s content does come with some caveats. It reportedly does not offer consumers a DVR option, excludes CBS (which offers its own live streaming service) and does not offer local networks not owned by ABC, NBC or Fox.
AT&T also faces competition with other existing cable-like streaming services such as Sling TV and Sony PlayStation Vue. The market is expected to become even more competitive in 2017 with Hulu’s expected move into live TV, which will include channels such as ESPN, ABC and Fox, as well as YouTube’s new “Unplugged” service, which will offer a bundle of not-yet-announced cable TV channels.