AT&T has confirmed that its new streaming TV service will be called AT&T TV. The service is getting a beta launch this summer in select markets.
AT&T CEO Randall Stephenson said the traditional DirecTV product will still be around for a long time but the new “thin client” streaming service will create new addressable markets while halving customer acquisition costs. The service will use an IP connection instead of a satellite dish, and will operate on a proprietary Android TV set-top box that AT&T is currently testing.
He said the lower customer acquisition costs will allow AT&T to offset rising programming costs so it can decrease price points for AT&T TV. For example, he pointed toward AT&T’s current carriage dispute with Nexstar Media, which he said asked for a 100% increase in broadcast television retransmission fees in its initial renewal offer.
“We’ve got to find a way to get the cost curve down on this product so we can keep people into the product for a longer term basis,” Stephenson said.
He said that AT&T TV will have a lower price point than DirecTV, and that the service will be the “work horse” over the next couple of years, getting a big marketing push from AT&T.
Stephenson also provided an update about HBO Now, for which the company hasn’t given out subscriber numbers. But, he said that HBO added a lot of digital subscribers thanks to “Game of Thrones.” WarnerMedia has an investor event scheduled for Oct. 29, where it will discuss the upcoming HBO Max service, and give more information about HBO’s digital subscriber base.
Stephenson did say that even through Dish Network has stopped carrying HBO, the premium network’s subscriber totals are up year over year.
“That tells you how strong the digital subscriber performance was,” Stephenson said. He added that churn has held steady since “Game of Thrones” ended thanks to new series including “Big Little Lies.”
AT&T’s WarnerMedia is preparing to launch HBO Max early next year. Stephenson said that his company’s efforts to clean up its customer base and focus on higher value customers will give AT&T a pay TV customer base “perfectly suited” for HBO Max, which will combine HBO content with Turner, Warner Bros. and exclusive original series.
But, to keep expanding margins for its pay TV services, AT&T said it still has about one million video subscribers on promotional pricing that it needs to deal with. AT&T CFO John Stephens said those price locks expire in the fourth quarter, which means that investors can expect to continue to see more of the same pay TV subscriber losses in the short term.
AT&T lost a combined 946,000 subscribers in the second quarter between its traditional and streaming TV services.