by Brandon Hill — Monday, October 28, 2019, 03:45 PM EDT
AT&T DirecTV Exodus Accelerates, 1.3 Million Customers Flee Rising Prices
Who could have seen this coming? AT&T promised that after its merger with Time Warner, customers would see reduced prices for its DirecTV Now streaming service (now called AT&T TV Now). Instead, AT&T did the complete opposite and raised prices, and now it is feeling the negative consequences of its actions.
AT&T reports that it currently has 20.4 million premium TV subscribers, which represents a net loss of 1,163,000 customers during Q3. AT&T TV Now stands at 1.1 million subscribers, which is down 195,000 for Q3. In total, AT&T lost over 1.3 million subscribers during Q3 2019.
It should be noted that DirecTV Now/AT&T TV Now first launched on November 30th, 2016 and at its peak in Q3 2018 had 1.86 million customers. As it currently stands, AT&T TV Now is at close to half that number, which isn't the trajectory that AT&T was hoping for as the streaming market is only going to get even more crowded in the coming year.
So, who's to blame for this poor Q3 showing? By all accounts, the wounds were self-inflicted. In the company's investor briefing [PDF], AT&T cited "customers rolling off promotional discounts, programmer disputes and competition as well as lower gross adds due to the continued focus on adding higher value customers" as the reason for its Premium TV subscriber shortfall. As for the poor performance of AT&T TV Now, the company attributed it to "higher prices and less promotional activity".
Promising to lower prices, then doing a complete 180 sounds like the perfect storm for customer attrition, and that's just what AT&T got during Q3.
Despite the losses in TV subscribers, AT&T is still optimistic about its future. "The strategic investments we've made over the last several years have given us the essential elements to meet growing demand for content and connectivity," said AT&T CEO and Chairman Randall Stephenson. "Our 3-year plan delivers both substantial and consistent financial improvements over the next 3 years."
The company also confirmed that Stephenson will stay on as CEO and Chairman of AT&T through at least 2020. However, a succession plan will then split those positions up between two individuals upon his departure. AT&T also says that has no plans for any additional big mergers in the near future and it has no plans of spinning off its DirecTV unit.
Tags: (NYSE:T), at&t, directv now, at&t tv now