DIRECTV NOW Expects More Losses in 2nd Quarter
AT&T CEO Randall L. Stephenson may have said that he believes the company is in a “sustainable place” when it comes to over-the-top (OTT) pricing for DIRECTV NOW — believing that the $50 price point is the sweet spot for users to pay for the service — but he also expects that Q2 will bring more subscriber losses, unfortunately. However, while Stephenson believes this current quarter may see losses, overall, he thinks the DIRECTV NOW customer base is going to remain stable the rest of the year.
According to Stephenson’s comments on their Q1 Earnings Call — he expects to see some more losses at the new $50 price point:
“We might see some slight customer losses in the second quarter as the price increases continue to flow through, but second half of the year should be decent. Bottom line, I remain comfortable that we’re either going to meet or exceed our Entertainment Group EBITDA target for the full year, and that’s going to lay the groundwork for continued stability as we move beyond 2019.
”On the subscriber losses, I said particularly on DIRECTV NOW, our streaming product, there we put the price increases and we’re seeing the effect of that in the fourth quarter (of 2018) and the first quarter. Second quarter, you will see that moderate, and I actually believe second half of the year based on what we’re seeing in terms of uptake in the market on the new platform and the new product that we should have a decent second half of the year on DIRECTV NOW. On the traditional premium product, DIRECTV, I said, you should expect to continue to see losses as we move through this year, but we will be launching second half of the year the thin-client, which think of that as our satellite replacement product, and why this is so important? It allows us to get into the market at a lower price point.”
The optimism from Stephenson is critical at a time where AT&T and DIRECTV NOW reported a loss of 83,000 subscribers in its Q1 report.