Unsurprisingly, AT&T's CEO Happy With Recent DIRECTV NOW Price Hike

In what is probably the least shocking news of the week, AT&T’s CEO, Randall Stephenson, explained the company is happy with the new $50 price point for DIRECTV NOW.

Stephenson made the comments during the company’s first-quarter earnings call (transcribed here) and pointed to how $50 is the right price for AT&T.

With Stephenson adding, AT&T is seeing “good uptake on the new platform, the new pricing.”

AT&T announced the price increase back in March and it took effect almost immediately for new subscribers, with existing subscribers provided with a grace period up until April 12.

The company opting to provide somewhat of an official comment on the support for the platform/pricing is interesting considering how recently the changes were made. Even more so considering DIRECTV NOW is not exactly in a state of growth at the moment.

During the same quarterly announcement AT&T confirmed DIRECTV NOW had lost 83,000 subscribers in the last three months alone.

On its own, that’s bad, but the picture becomes even worse when accounting for the three months before when DIRECTV NOW lost an additional 267,000 subscribers.

With 350,000 subscribers gone in the last six months, it remains to be seen what exactly AT&T or Stephenson defines as a “good uptake.”

It would seem Stephenson is arguing that in the limited time since the price increase came in, the service has seen a good number (by AT&T's definition) of new customers signing up for the service while ignoring how the number of people leaving the service during the same time has been far greater. Something that's unlikely to change anytime soon.

In fact, Stephenson hinted at the near-future outlook by stating “you may still see the OTT product be negative in terms of subscribers,” suggesting AT&T and DIRECTV NOW are already bracing for another subscriber decline in the next quarter, if not the quarter after that.

In spite of the “good uptake” the reason Stephenson attributed to the likelihood of the upcoming negative subscribers will be “the price increases.”

It is worth noting that even the suggestion the service is getting a good return on new subscribers is up for debate. Due to the nature of the industry, new subscribers will most likely have switched to DIRECTV NOW from a competing service or from one of the traditional linear options, including AT&T own DIRECTV satellite service.

For reference, DIRECTV lost 544,000 subscribers during the same period when DIRECTV NOW lost the 83,000.

If even a small percentage of those existing satellite customers switched to the NOW version of the service then it might give the impression DIRECTV NOW is healthier than it is when viewed separate from the wider DIRECTV ecosystem.

This is also without taking into account the spike in activity currently expected due to the release of the final season of Game of Thrones.

When AT&T announced the new plans (and higher pricing) it also cut down on the number of channels provided and looked to offset the fallout from this double-hit by including HBO for free in with its DIRECTV NOW plans.

Essentially, discounting the price that many would have to pay each month by $15 during what is arguably one of the network's busiest times of the year.

Adding to the complication of predicting the near or long-term success of the price change, and in spite of just upping the price, DIRECTV NOW is currently offering new subscribers the option to sign up for just $30 per month.

At $15 more than the cost of HBO alone, it stands to reason the last few weeks would have seen gains in subscribers. But these are short-term gains as the discounted price is only good for the first three months.

By which point Game of Thrones will have also ended its run and HBO will likely see a drop in those temporary viewers.

The question is whether those subscribers will remain with DIRECTV NOW when their price moves back to the standard $50 (minimum) per month. If not, then a portion of those currently referred to as the "good uptake" will be added to the ever-growing DIRECTV NOW exodus.

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John Anon

Editor-in-Chief
John has been writing about and reviewing tech products since 2014 after making the transition from writing about and reviewing airlines. With a background in Psychology, John has a particular interest in the science and future of the industry. Besides adopting the Managing Editor role at AH John also covers much of the news surrounding audio and visual tech, including cord-cutting, the state of Pay-TV, and Android TV. Contact him at [email protected]