AT&T Happy 'Low-Quality Subscribers' Are Leaving DIRECTV NOW

You may place a quality value on a service you pay for or subscribe to, but by the same token some of those businesses also place a quality value on you as a customer.

AT&T would seem to be one of those companies.

In comments (transcribed here) given by AT&T’s CEO & President, Randall Stephenson during a J.P. Morgan Conference this week, Stephenson explained how this year was a ‘clean up’ year for DIRECTV NOW.

Initially, these comments were in reference to the content with Stephenson pointing to contract negotiations as how the service was being cleaned up. Recently, DIRECTV NOW relaunched with a new channel lineup which placed a much greater emphasis on content owned by AT&T.

However, when padding out the answer, Stephenson also made it clear that this year was just as much about “cleaning up” the customer base as it is the content.

Stephenson explained how this was already in effect and can be seen in the significant subscriber losses DIRECTV NOW has seen in the past six months.

According to Stephenson, the customers leaving are primarily “low-ARPU” (Average revenue per user) customers with the suggestion being they matter less as they do not generate enough revenue for AT&T to be concerned about their departure.

Stephenson reiterated this statement by noting how once the “customer cleanup” has been completed, the service expects to be profitable thanks to the “high-quality customers” that are still on the books.

Reading between the lines, it does seem that AT&T views the current reduction in users to be not just an acceptable loss, but an encouraged one. This is in spite of DIRECTV NOW being the reason it has these low-ARPU customers in the first place - DIRECTV NOW has taken a highly aggressive approach in the last couple of years by greatly reducing the price of its plans (including completely offsetting the cost to some existing AT&T customers) in a bid to attract users to the video platform.

Now that it has what it considers to be enough users, it has begun to clean up the customer base by removing those individuals that don’t generate an acceptable level of revenue.

One of the reasons AT&T probably cares less about these low-ARPU customers is its upcoming direct-to-consumer solution which it expects to be a big-hitter when it arrives, attracting "tens of millions of subscribers."

Stephenson argued that people do not currently “have an appreciation for what this product will bring to bear” and pointed to the wealth of Warner Bros. content AT&T now has direct access to.

Speaking of which, Stephenson also suggested that wide pool of content will not just be available through the new WarnerMedia-focused streaming service, but will likely only be available through its service.

What was explicitly said is AT&T plans to bring “media rights, licensing rights back to ourselves” for the purpose of promoting the SVOD service. The clear suggestion here is some of the most popular shows now owned by AT&T won’t be available at the same time through other streaming services.

"Friends," "Seinfeld," and "The Big Bang Theory" were all name-dropped during the comments as prime examples of the content that is likely to be removed from other services in favor of exclusivity on the upcoming WarnerMedia service.

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About the Author

John Anon

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]