Deeper Dive—DirecTV soldiering on despite drastic subscriber losses

DirecTV helped contribute to a catastrophic quarter for pay TV subscriber losses. (Ben Munson/FierceVideo)

AT&T certainly has reason to be concerned about the long-term health of its satellite TV business after a particularly brutal quarter. But DirecTV isn’t going away anytime soon.

AT&T has hinted in the past that ditching the dish could be a way to bring down costs for pay TV. At an investor conference in 2017, AT&T CEO Randall Stephenson said that high costs are what ultimately lead many consumers to cut their pay TV service. He said that since programming costs are not coming down, the best way to reduce costs is by cutting back on the expenses involved with maintaining a satellite-based delivery system.

After a quarter in which the company posted 346,000 net subscriber losses in its traditional video business, CFO John Stephens appeared at an investor conference to offer more details on a new device and service AT&T has planned to help stem the tide of subscriber losses and customer acquisition costs.

AT&T is testing an Android TV set-top box—complete with a new user interface—that will power a full DirecTV package that’s delivered via the internet rather than a satellite dish. The new products are expected to hit the market in 2019.

The streaming device and full, streaming DirecTV service is coming as AT&T is facing a dwindling traditional TV subscriber base. But DirecTV still has more than 25 million subscribers and it’s part of AT&T’s Entertainment Group that contributed nearly $11.6 billion in revenue last quarter, second only to AT&T’s wireless business. So, DirecTV isn’t going anywhere.

“We have no plans to discontinue satellite service. Our video strategy involves offering our customers choices in how they want to receive their video service, including via satellite, our wireline service or streaming over home broadband, regardless of their provider,” AT&T said in a statement.

That was the response FierceVideo got from AT&T when it shared with it concerns that readers shared with us in response to this article.

One anonymous call agent told us that a common complaint is that AT&T does not fix DirecTV equipment and that it offers refurbished receivers. The commenter said that if DirecTV customers are already complaining about high prices, poor delivery of service and no service calls, why would they accept a scenario where they have to install the device on their own?

Another reader suggested that a variety of service options would be much better than sending the setup via UPS and questioned whether AT&T had considered the elderly in this scenario. That comment suggests the reader was concerned that the setup process may be complicated.

Yet another reader expressed concern over what AT&T would do about homes in rural settings that still want full pay TV service but don’t have the most reliable internet connections.

AT&T’s answer to these questions is that DirecTV is here to stay and that the company is simply rolling out more options for people looking for pay TV.

Right now, AT&T’s virtual MVPD DirecTV Now (at about 1.8 million subscribers) isn’t growing fast enough to offset the losses to the company’s traditional TV business. The full DirecTV streaming product could help with that. But if subscriber losses continue at the rate they reached during the third quarter, AT&T may eventually have to do something more drastic to save the ship from its sinking satellite business.

As of right now, though, DirecTV is sticking around.