A year after launching its virtual MVPD service, AT&T said today that its DirecTV Now platform has surpassed the 1 million subscriber threshold.
The virtual service has grown quickly in recent months as AT&T’s linear platforms, DirecTV satellite and U-verse IPTV, have experienced major customer attrition.
AT&T said that DirecTV Now added 300,000 customers in the third quarter. The service, which launched on Nov. 30, 2016, grew quickly out of the gate, reaching the 200,000-customer threshold before New Year's Day. But early technical issues caused AT&T to shut down promotions for DirecTV Now. The service grew negligibly in the first quarter, spurring doubts among some media analysts about the future of the platform.
RELATED: DirecTV Now lost 3K subscribers in February, was flat in March, report says
With AT&T having worked out the bugs and now offering sign-up enticements like free Apple TV devices, the promotional heft is firmly behind the platform these days. So are analysts—one of whom, Parks Associates’ Brett Sappington, was even quoted in AT&T’s press release announcing the 1 million milestone today:
"To reach 1 million subscribers is an important benchmark for any OTT video service, but to go from zero to 1 million subscribers so quickly is quite an achievement,” Sappington said.
While AT&T’s transitioning of its video business into a platform that streams more than 60 live broadcast and cable channels for just $35 a month isn’t necessarily being understood and lauded by every Wall Street media guru, Jefferies analysts recently sat down with executives for the wireless giant and heard their rationale.
“The company’s top strategy to mitigate cord cutting is DirecTV Now,” wrote Jefferies analyst Scott Goldman, who presented his take last week after meeting with AT&T management.
RELATED: DirecTV Now will ultimately yield higher customer lifetime value, AT&T management believes
“Management is focused on providing tailored offers to drive lower churn over time,” he wrote. “While DirecTV Now carries lower margins, management believes the platform could ultimately yield higher customer lifetime value when leveraging the value of collected consumer data and the potential for adding broadband and/or wireless to the mix.”