AT&T Wants to Move DIRECTV Customers to Streaming Services Like AT&T TV & HBO Max
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5G prices when they start out may be cheaper, to get people interested, but they will go up over time so that they are maximizing thier profits ...
And internet in the U.S. is ridiculously expensive compared with most other developed countries. See US broadband is scarce, slow and expensive. 'Great!' says the FCC
Due mainly to lack of competition, and the lobbying activities of the major ISPs
Due mainly to lack of competition, and the lobbying activities of the major ISPs
5g has to work first...my guess is they will get about 1/2 done deploying 5g and then will switch to 6g with better frequencies
Sent from my SM-G950U using the SatelliteGuys app!
Sent from my SM-G950U using the SatelliteGuys app!
You can get a LTE router and T-Mobile offers what they call "Binge On Video" where most video streams don't count against your data, sites like Netflix, Youtube, ATTTV, Prime, Fubu, etc..
See the extensive list here
Unfortunately you can't stream HD on this current program, but the LTE broadband for home use is just getting going. Several providers are gearing up to offer broadband to everyone, rural areas are their main target. Even Elon Musk has a serice that it supposed to launch in late 2020. Tmobile claims they will have 5G available to 5.5M people by the end of this year. ATT, Verizon and Dish all have their own LTE 5G programs in the works. Broadband prices are likely to become very competitive in the next 1-2 years.
See the extensive list here
Unfortunately you can't stream HD on this current program, but the LTE broadband for home use is just getting going. Several providers are gearing up to offer broadband to everyone, rural areas are their main target. Even Elon Musk has a serice that it supposed to launch in late 2020. Tmobile claims they will have 5G available to 5.5M people by the end of this year. ATT, Verizon and Dish all have their own LTE 5G programs in the works. Broadband prices are likely to become very competitive in the next 1-2 years.
Maybe Stephenson's latest comments will put their tired and stupid rumor to rest:
Which is exactly what I've been saying all along. Expecting/encouraging new customer adds to be mostly on streaming (and possibly making it more expensive to choose satellite by making customers pay for install) doesn't mean satellite will go away in a few years like some people here keep wanting to push.
Stephenson said there’s a little bit more of promotional pricing “cleanup” that will run into the fourth quarter but that video subscriber losses will significantly improve in the fourth quarter and get better in 2020.
He said that the DirecTV satellite service, which he said still produces more than $4 billion in free cash flow per year, will have a long life. But he reiterated that AT&T TV, the company’s upcoming streaming TV service, will be the primary vehicle for going to market.
Stephenson said that AT&T TV will begin to attract the lion’s share of gross subscriber adds over the next couple of years.
“That cannibalizes satellite. It replaces satellite. But we actually like if gross adds are coming on that product,” he said because AT&T TV has a lower cost point and allows the company to meet a much different price point in the market.
He said that the DirecTV satellite service, which he said still produces more than $4 billion in free cash flow per year, will have a long life. But he reiterated that AT&T TV, the company’s upcoming streaming TV service, will be the primary vehicle for going to market.
Stephenson said that AT&T TV will begin to attract the lion’s share of gross subscriber adds over the next couple of years.
“That cannibalizes satellite. It replaces satellite. But we actually like if gross adds are coming on that product,” he said because AT&T TV has a lower cost point and allows the company to meet a much different price point in the market.
Which is exactly what I've been saying all along. Expecting/encouraging new customer adds to be mostly on streaming (and possibly making it more expensive to choose satellite by making customers pay for install) doesn't mean satellite will go away in a few years like some people here keep wanting to push.
It doesn't mean that DTV satellite service is completely going away but it does mean that the downward trend in DTV subscriber numbers will continue as AT&T actively pushes AT&T TV instead of DTV. Whether or not pricing on AT&T TV is "a much different price point" than DTV, we'll see, but Stephenson has been saying all along, and continues to say today, that AT&T TV will be less expensive for consumers than DTV due to its lower cost point for the company, while being just as profitable for the company. If AT&T is offering two substantially similar cable TV services and one is appreciably less expensive for consumers (e.g. average price of $80 vs. $100), then the clear, intended effect will be that the cheaper service "cannibalizes" and "replaces" the more expensive one, just as he said today.
Everything he's saying is in line with what I've been predicting for the past year or two, which is that they'll move as many folks over from DTV (and Uverse TV) to AT&T TV or HBO Max as they can in the early 2020s. No one will be forced to switch but they'll be incentivized to do so through lower pricing, plus a big marketing push behind AT&T TV and HBO Max (while DTV receives very little active marketing any more). And then, come 2022 or 2023, it's reasonable to think that we'll see them spin off or (if they can) sell DTV. I still think the most likely scenario is some kind of joint venture with DISH that ultimately combines the two satellite TV services. I suppose it's possible for such a deal to happen even in the next couple years if there's enough pressure from Wall Street but it sounds to me like AT&T management would prefer to see that happen a little further down the road to give them time to transition as many satellite TV customers as possible over to AT&T TV or HBO Max. In the meantime, they'll retain full control over DTV and receive all of the free cash flow it generates, which is still a substantial amount, even if it is shrinking.
One of the bigwigs at AT&T went on the record several months back saying that once AT&T TV gets off the ground, DTV will shift to being primarily aimed at rural dwellers. And Stephenson reiterated on today's call that DTV will be an important part of the company over the coming three years (although he also noted that they have no "sacred cows" and are open to considering potential deals, which could presumably include a sell or spin-off of DTV).
What I expect to see starting in 2020 is little-to-no national advertising for DTV. Instead, all the emphasis will be on HBO Max and AT&T TV. But DTV will still be available for folks who want to keep it or who seek it out to sign up for it. And I imagine they'll continue to actively market it in rural areas through print ads in the mail plus maybe ads on radio, in-store sales kiosks, etc. DTV isn't going away any time soon, it's just going to shift to AT&T's back burner.
ATT needs to do more doing and less talking! They’ve been sending out all sorts of messages about what they want but their actions haven’t been so good.
Yeah, yeah, I know - HBO Max! But they aren’t talking about doing that until next year. In the meantime they’ve introduced fat bundles of channels at fat prices that have seen more than one price increase in less than a year. In the process they keep losing customers. Yeah I know, they say they are the ‘low profit’ customers but are they really? Or are a significant number of them just pissed at the price increases with no real benefit to the guy paying the bill?
And while this fiasco is going on the other streaming providers are seeing some increases in subscriptions with their skinny channel count and lower prices. Not to mention that for those able to get cable are finding their local cable company waiting with open arms for a nice bundle at a nice price.
Do I think HBO Max will be the saving grace for ATT? Possibly but more so for those that sub to HBO in one way or another already and less so for others.
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Yeah, yeah, I know - HBO Max! But they aren’t talking about doing that until next year. In the meantime they’ve introduced fat bundles of channels at fat prices that have seen more than one price increase in less than a year. In the process they keep losing customers. Yeah I know, they say they are the ‘low profit’ customers but are they really? Or are a significant number of them just pissed at the price increases with no real benefit to the guy paying the bill?
And while this fiasco is going on the other streaming providers are seeing some increases in subscriptions with their skinny channel count and lower prices. Not to mention that for those able to get cable are finding their local cable company waiting with open arms for a nice bundle at a nice price.
Do I think HBO Max will be the saving grace for ATT? Possibly but more so for those that sub to HBO in one way or another already and less so for others.
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Well sure if you aren't paying the $15 advanced receiver fee since you don't get a Genie the package pricing can be the same and AT&T TV will be cheaper. If they make you pay for the install for satellite (which I think they will in a couple years once AT&T TV is established) then even more so. The actual per customer delivery cost is so small for either it wouldn't even factor into their pricing decisions, it is all down to no truck roll for install and not making people pay $15/month for a Genie - though since that's mostly profit it means AT&T TV will be less profitable for them than Directv at the same package pricing.
But it isn't likely to be satellite customers switching to AT&T TV so much as it will be that new customers mostly choose AT&T TV because it is cheaper.
Over $20 difference in price, I doubt you'll have many moving from D* to Streaming (ATT TV).
No, he's gone on record before saying that AT&T TV will be priced so that it provides the same amount of profit to the company as DTV (and, given the lower cost basis for AT&T TV, it will actually have *higher* profit margins).
It'll be interesting to see what the mix is for sign-ups to AT&T TV over its first couple of years in terms of new customers versus those switching to it from DTV and Uverse TV. I suspect that when DTV customers who are out-of-contract call up and ask for some kind of loyalty discount, they'll be told that they have three options:
- suck it up and keep paying the standard price for their current DTV package (e.g. Choice, Xtra, etc.)
- switch to a new DTV package that includes HBO Max (e.g. Plus or Max), which might be less expensive than their current package (but also contain fewer channels)
- switch to AT&T TV, which will offer the same set of new channel packages that DTV offers (e.g. Plus, Max), but at lower prices
Some portion of those customers will choose option 3. And to make matters worse for them, I expect that they'll eliminate multi-product discounts for DTV too. If you have AT&T Wireless and/or AT&T Fiber/Internet, the products they'll want to sell you with a bundle discount will be AT&T TV and HBO Max, not DTV.
Even if the headline prices for the same channel packages on AT&T TV are only $10 less than on DTV, if they include 3 simultaneous streams on AT&T TV but only service and hardware for 1 TV on DTV, with additional TVs on DTV costing $7/mo, that would be significant. On average, how many TVs do you think the average DTV customer has service to? 2.5? That would amount to paying $20.50 less per month on AT&T TV using the hypothetical pricing I cite ($10 + (1.5 x $7)). Over the course of 24 months (the length of the standard DTV contract), that adds up to AT&T TV costing $492 less. But then how much more is AT&T paying to do a DTV install, with rooftop dish, wiring, and hardware at 3 TVs, versus UPS shipping for a self-install for AT&T TV with a single C71 Android TV box shipped to the customer?
I'd bet you're wrong. Get the same channel package on AT&T TV as on DTV but continually pay $20/mo less going forward at the standard pricing (without having to call up and beg for limited-term discounts). Plus get a next-gen box with voice remote that offers easy access to streaming apps like Netflix, YouTube, etc. plus Google Assistant for control of smart home devices, etc. Sure, a decent chunk of customers will stay put on DTV because it's what they know and they're comfortable with it. But quite a few will switch over, especially if they're told that's their only option to lower their bill when they call up and complain about pricing looking for discounts. I suspect that the days of DTV customers scoring big loyalty discounts are largely over.
What "lower cost basis"? It costs the same for the rights, which is 2/3 of the revenue and the only thing that really matters. The delivery isn't any cheaper, if anything it costs more for streaming but either way it is like 1% or perhaps 2% of the revenue so a total non factor. The clients they will provide for AT&T TV cost pretty much the same as the Directv ones (actually a bit more since they are all 4K & wireless capable) There are only two things that cost AT&T differently to provision 1) initial install 2) providing a Genie.
They've explained this several times. The lower cost basis for AT&T TV vs. DTV comes from the former's lower customer acquisition costs, mainly from far less expensive self-installation and CPE. Spread those costs out over the life of the average new cable TV subscriber account that AT&T will sign up in the coming months and years.
Stephenson has also talked about how, once they get Xandr firing on all cylinders, addressable advertising will play an important role in the profitability of AT&T TV and HBO Max (the forthcoming cheaper plan that will include ads). I know addressable advertising has been used to an extent with DTV but I don't know if it can fully participate in the company's plans for that space the way that native streaming services can.
You can dispute it all you like. I'm just repeating what Stephenson has claimed multiple times on earnings calls to equity analysts: that because of the lower costs associated with providing AT&T TV, they can and will offer it at a lower price. Again, I'm a bit skeptical of his characterization yesterday that AT&T TV will feature a "much different price point in the market" than DTV. I guess it comes down to one's definition of "much". I think it's reasonable to expect that the average consumer would see an ongoing monthly bill that's 15-20% lower on AT&T TV than on DTV assuming he uses his own streaming boxes beyond the free AT&T TV bo
es) given to him at sign-up.I'm skeptical that we'll see DTV cease offering "free" professional installations and 2-year contracts any time in the next couple of years. For one thing, DISH does it, so they have to match. Also, it's too much of a disincentive to sign up if customers have to fork over a big fee just to initiate service. (Orby TV charges $150 for installation, for instance.) Consumers have been conditioned to the opposite, getting up-front freebies when they take a 2-year contract for satellite TV, not having to pay good money just to start service.
So if DTV continues to offer free installation, then they'll have to continue spreading that cost into the monthly prices that are charged over at least those first 24 months of service.
I disagree, I think by the end of 2021 they will make people pay the cost up front for a satellite install - and allow a self install option for people who want to save money or already have a dish on their roof and just need receivers.
In rural areas there is only one competitor, they've always had higher prices than Dish and did just fine. In other areas with cable/streaming as competition you don't want a higher monthly rate because it'll reduce the uptake. Anyone would half a brain would rather pay $150 up front than $10 a month more forever. And you know that's how they'd price it, it would become another profit center to them.
I saw an interesting tidbit yesterday in AT&T's announcement. They said they are still making over $4 billion a year in free cash flow from Directv, so obviously the subscriber losses haven't impacted profitability at all. If you dig further, that equates to a little over $200 a year in profit per customer. For the $22/month they collect from the advanced receiver fee and first TV fee, they provide you with a Genie (or Genie and client if you have an HS17) which costs AT&T less than $300 for an HS17+C61. Those are amortized over five years, so the actual cost of those to Directv is $5/month. Subtract $5/month from $22/month and you get $17/month - which is basically equal to their average profit per customer!
They aren't making any profit on the packages, it is all from the equipment fees, so selling packages at the same price (let alone lower) for streaming is not going to be profitable for them unless they can magic up a ton of additional ad revenue that they somehow can't also get from internet connected Directv customers.
In rural areas there is only one competitor, they've always had higher prices than Dish and did just fine. In other areas with cable/streaming as competition you don't want a higher monthly rate because it'll reduce the uptake. Anyone would half a brain would rather pay $150 up front than $10 a month more forever. And you know that's how they'd price it, it would become another profit center to them.
I saw an interesting tidbit yesterday in AT&T's announcement. They said they are still making over $4 billion a year in free cash flow from Directv, so obviously the subscriber losses haven't impacted profitability at all. If you dig further, that equates to a little over $200 a year in profit per customer. For the $22/month they collect from the advanced receiver fee and first TV fee, they provide you with a Genie (or Genie and client if you have an HS17) which costs AT&T less than $300 for an HS17+C61. Those are amortized over five years, so the actual cost of those to Directv is $5/month. Subtract $5/month from $22/month and you get $17/month - which is basically equal to their average profit per customer!
They aren't making any profit on the packages, it is all from the equipment fees, so selling packages at the same price (let alone lower) for streaming is not going to be profitable for them unless they can magic up a ton of additional ad revenue that they somehow can't also get from internet connected Directv customers.
Not a chance the cost is the same. Far lower for streaming, no Satellites, no boxes, no install, no installers, no no no. Not to mention (lol but I am going to mention) they already do streaming anyway.
Claude made a good point, At&t needs to be the internet provider also to truly get their "money's worth."
Too many variables to believe how many do not have internet or fast enough internet. Based on what, current use or if they streamed all programming all the time? Fast enough for one TV or two or three? Add to that the little important thing of reliability - how often in some areas does it go out. And on and on. Nothing beats satellite for delivery all things considered, not just looking at one aspect.
The cost of the satellites is tiny - about 50 cents a month per customer INCLUDING REPLACEMENT. That's at current customer counts, obviously if they lost half their customers that doubles to a buck a month. Even including other costs for maintaining the uplinks it is probably like a buck a month currently - like 1% of your bill. All the bandwidth, CDNs, storage for cloud DVR and so forth isn't exactly free. I wouldn't be surprised if satellite delivery is actually cheaper per customer, but when you are talking 1% of your bill it is basically irrelevant. The only real difference between the two is the up front cost for the install, and that's easily paid for by the $7/month fees for second, third etc. TVs.
Maybe look at my math before pronouncing me wrong. Directv is making ALL their profit on the equipment fees for the FIRST TV. Additional TVs are gravy, that more than pay for the install. If they price the packages the same between Directv and AT&T TV, and give similar discounts, I don't see how AT&T TV is profitable.
