AT&T will price DirecTV Now at $35 a month when it launches the virtual MVPD service next month, CEO Randall Stephenson said.
“How do you get to a $35 price point with the prices these guys charge for content? You don’t have a satellite dish, you don’t have a guy spending four hours to install the service, and you don’t have a $300 set-top,” said Stephenson, speaking alongside Time Warner Inc. Chief Executive Jeff Bewkes at the Wall Street Journal’s WSJ.D Live conference in Laguna Beach, California, today.
The virtual pay-TV service will launch with a national footprint and include more than 100 channels.
UBS analyst John Hodulik said AT&T will be hard-pressed to turn much of a profit on the price point, given its programming costs.
"We estimate monthly programming costs for DirecTV Now in the low $30 range, similar to the price AT&T will charge, meaning the company will not make much on this service," Hodulik said to investors in a Tuesday afternoon research note. "However, it will avoid costs for satellites, set-top boxes and installations/trouble-shooting
When asked if the OTT service, which is as easy to sign up for and quit as Netflix is, will effectively compete with traditional cable at a time when satellite is losing market share to companies like Comcast and Charter, Stephenson said, “I’m evangelical about that. This is the most exciting thing I’ve been a part of in a long time, and I can’t wait.”
Stephenson, however, dismissed the notion that AT&T is looking to displace DirecTV’s traditional satellite distribution scheme, at least in the near term.
“For a long time, there are going to be households where you need three 80-inch screens streaming heavy video. And satellite is going to be the vehicle for that for a long, long time,” he said.
Stephenson, meanwhile, used the opportunity to reiterate his position that Time Warner Inc. – the subject of an $85.4 billion AT&T takeover proposal – will be run as wholly owned subsidiary, should the deal be approved by regulators.
“I’ve never run a movie studio. I don’t know the first thing about it,” he said.
Update: This article was updated on Oct. 26, 2016 to include the research note from UBS.