AT&T CEO Randall L. Stephenson said he believes that the company is in a “sustainable place” when it comes to over-the-top (OTT) pricing for DIRECTV NOW, and doesn’t foresee an increase from the $50 price point that it’s currently at. According to Stephenson if the product gets the advertising revenues it expects, $50 is the sweet spot for users to pay, hoping that that number retains customers.
“This is a segment of the market that had, by and large, left the linear product market because of pricing. And so as we came in with a $40 product, you saw a significant uptake, and it was largely people who had left the market. And as we began to move the pricing and try to get the profit equation right, you saw some fallout. But now we are in the market at this $50 price point, and we’re early on in terms of getting the new platform out there. It came out, I think, very end of March, but we’re seeing good uptake on the new platform, the new pricing.”
“As I said, during the second quarter, you may still see the OTT product be negative in terms of subscribers as we continue to experience the price increases on the base. But what we’re seeing on the uptake of the new products and the new price point is giving us confidence. So, we get to the second half of the year, this thing ought to do decent growth, and so we’re actually optimistic. But it is a very price sensitive product. Make no mistake about it.”
Stephenson’s reply came following a question about price increases across the board from streaming services and streaming video products. If AT&T and DIRECTV NOW, which reported a loss of 83,000 subscribers in its Q1 report, can help steady the market, that’s good news for users of all platforms, and could drive even more customers to DIRECTV NOW.