Price hikes are driving customers toward the exits, but AT&T is determined to increase profits.
Christopher Lee/Bloomberg By Brian Fung Brian Fung Reporter focusing on telecommunications, media, and competition Email Bio Follow April 24 at 4:04 PM DirecTV Now, AT&T’s streaming video app, has seen sharp customer declines in recent months that all but wiped out a year’s worth of subscriber growth, according to the company’s latest earnings report.
The steep losses highlight the obstacles facing AT&T as it seeks to build a viable successor to its legacy TV products, DirectTV and U-verse, which also have continued to suffer as Americans cancel traditional cable subscriptions. But, some analysts say, the slump at DirecTV Now is another sign that the holy grail of cheap, a la carte television remains as elusive as ever, and that the promise of cord-cutting has yet to materialize for consumers.
AT&T blamed the DirecTV Now losses on the end of promotions that had encouraged many consumers to sign up for the app in the first place. Also last month, DirecTV Now announced that existing customers would pay $10 more per month, the second time in nine months that prices had risen. In a statement, AT&T said DirecTV Now’s price changes meant the company was, on average, making more money from each subscriber.“Video volumes — both traditional and DIRECTV NOW — were affected by our focus on long-term profitability,” the company said. “Our goal is to drive strong lifetime values across multiple products, so we’re increasing our focus on higher-quality customers.”
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