DirecTV Now's price hikes and skinnier bundles could worsen churn — but push towards profitability

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DirecTV Now's price hikes and skinnier bundles could worsen churn — but push towards profitability
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DirecTV Now will hike prices, drop some cable channels, and add HBO to new package offerings

that it will hike prices, drop some cable channels, and add HBO to new package offerings, per Variety.The $10 price hike affects two new packages, and is DirecTV Now's second in under a year.

Skinny bundles have earned a reputation as money-losing services, and scale actually makes that problem worse, not better. The carriage fees skinny bundle operators pay out to networks are on a per-sub-per-month basis. These fees are essentially equal to the service's price point, meaning margins are slim or nonexistent. Scale compounds this problem because the more subs a service adds, the more they must pay out to networks in fees. So far, operators have been willing to stomach the losses in order to test the viability of these services as a cable replacement, and to build scale through more reasonable pricing.

The move, which will worsen churn, underscores DirecTV's laser focus on profitability — even if it means losing subs in the near term. DirecTV is now the second biggest skinny bundle service on the market, with about 1.8 million subs — but it reported 267,000 in sub

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