Cord-Cutters Still Negatively Impacting Pay Television With No End In Sight

According to the chief financial officer of AT&T, John Stephens, most of the subscribers to DirecTV Now are new to the telecommunication giant’s television service. Though a percentage of television subscribers were cannibalized by the streaming service, there are more new customers being roped in by AT&T as a result of DirecTV Now.

In the second quarter the telecommunications giant began offering a discount of $25 on the monthly subscription price for DirecTV Now as long as consumers also signed up for an unlimited wireless-data plan with AT&T. However under 50% of the subscribers to DirecTV Now took up the discount and this is evidence that there exists an enormous opportunity of raising the number of sign-ups.

Niche product

The number of postpaid mobile phone subscribers that AT&T lost in Q3 was 241,000. Though bundling a wireless plan with DirecTV Now is probably assisting in slowing down net losses, the telecommunications giant is still unable to make up for the hemorrhage. This is because DirecTV now is still a niche product despite AT&T having smartphone subscribers numbering around 59 million.

According to Stephens the niche that DirecTV Now is serving is cord-nevers – the category of consumers who have never had a traditional pay-television subscription as this group makes up around 50% of the subscriber base. The number of subscribers who are abandoning traditional pay television is 41% while the percentage of subscribers who were originally customers of AT&T is 10%.

Credit policy

Stephens said that part of the reason AT&T lost some television subscribers was because the telecommunications giant tightening its credit policy which led to a negative impact on subscriber count. The hurricanes which hit some parts of the United States such as Texas and Florida also led to a loss in subscribers especially with regards to U-Verse and DirecTV.

But with the hurricanes out of the way, AT&T expects an improvement in subscriber numbers in Q4 especially with regards to linear television services. However competition is expected from other streaming services and this will affect not just DirecTV Now but also legacy linear television services.

The cord-cutting phenomenon is not only affecting AT&T but also other players according to DSLReports. The publication reports that loss of subscribers was widespread and affected most of the largest providers of pay television.

“Only five of the seven biggest pay TV providers have released their third quarter subscriber data, but collectively these companies saw a net loss of 632,000 pay TV subscribers during the period,” read a report by DSL.

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