DirecTV Now will ultimately yield higher customer lifetime value, AT&T management believes

AT&T / DirecTV Now
AT&T management believes DirecTV Now will evolve to yield more per-customer value than IPTV or satellite. (Image: DirecTV Now)

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 after meeting with AT&T management. 

“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.”


Like this story? Subscribe to FierceVideo!

The Video industry is an ever-changing world where big ideas come along daily. Cable, Media and Entertainment, Telco, and Tech companies rely on FierceVideo for the latest news, trends, and analysis on video creation and distribution, OTT delivery technologies, content licensing, and advertising strategies. Sign up today to get news and updates delivered to your inbox and read on the go.

RELATED: AT&T: DirecTV Now 2.0 is coming in the first quarter of 2018

Goldman noted that AT&T’s transitioning of DirecTV Now onto a new technology platform, which will occur in the first quarter, will drive up ARPU, with customers offered premium options like 4K and cloud DVR.

AT&T added nearly 300,000 customers to its virtual MVPD service, DirecTV Now, in the third quarter. However, with the conglomerate losing almost as many video customers across its DirecTV satellite and U-verse IPTV platforms, analysts largely wrote off the company as trading dollars for nickels. 

In his note, Goldman isn’t as dismissive of AT&T’s rationale for transitioning its customers to the virtual platform with the lower margins. But he admits that it’s “unclear as to when margins could begin to stabilize.”

Suggested Articles

Marketing for 8K television may need to add a warning: math involved.

AT&T is filling in some details about the WarnerMedia Innovation Lab, which is opening in 2020, and that it announced earlier this year.

Comcast is launching new controls for its X1 television service that will allow people with certain disabilities to operate their cable TV systems using their…