×

AT&T TV: An Unskinny Streaming Bundle That Looks a Lot Like Traditional Pay TV

AT&T this week launched AT&T TV, a new subscription streaming television service that uses an Android-based internet set-top, in 10 markets. But the way it’s priced and packaged looks very similar to cable and satellite TV services — in other words, AT&T TV isn’t targeted at the cord-cutter crowd.

It’s basically designed as a way for the telco to migrate customers from its DirecTV satellite and U-verse services, to deliver a premium, full-price (i.e. healthy margin) TV bundle more cost-effectively by providing for subscriber self-installation. Unlike other “virtual pay-TV” internet services, AT&T TV carries promotional pricing contingent on a traditional two-year contract, and subscribers are subject to activation and early-termination fees.

Analysts are unsure whether AT&T TV will see significant uptake. AT&T chief Randall Stephenson has promised that the new product will be the “workhorse” for the company’s pay-TV business over the next few years.

“[I]t is unclear whether the high end of the market will pay full price for a streaming service,” while AT&T TV will be unattractive to cost-conscious consumers, UBS Securities analyst John Hodulik wrote in a research note Wednesday.

The base AT&T TV “Entertainment” package starts at $59.99 per month in the first year — climbing to $93 monthly in the second year. The top-tier “Ultimate” package is $79.99 per month for first 12 months, jumping to $135 monthly thereafter. That pricing is well over other value-oriented over-the-top streaming platforms, like YouTube TV ($50 per month), Hulu With Live TV ($45 per month), or Dish’s Sling TV (which starts at $25 per month).

Moreover, note that AT&T TV requires a separate broadband service, with a recommended minimum of 8 Mbps per stream. AT&T is selling a bundle that includes broadband plus AT&T TV for $89.99 per month for the first 12 months going up to $133 monthly ($93 for TV and $40 for internet).

“We believe [AT&T TV] alone is unlikely to drive a dramatic shift in sub trends but should lower costs in [AT&T’s] Entertainment segment while providing a boost to addressable advertising,” Hodulik wrote.

AT&T TV is currently available in Orange, Calif.; Riverside, Calif.; West Palm Beach, Fla.; Topeka, Kan.; Wichita, Kan.; St. Louis, Mo.; Springfield, Mo.; Corpus Christi, Texas; El Paso, Texas; and Odessa, Texas.

The newly launched AT&T TV does include some bells and whistles: The 4K-enabled set-top integrates third-party apps from Netflix and Pandora, and includes a voice remote with the Google Assistant built-in. But other pay-TV services, like Comcast’s Xfinity X1, offer similar features.

AT&T TV allows a maximum of three concurrent streams and includes three months of free access to HBO, Cinemax, Showtime and Starz, as well as a video-on-demand library with 55,000 titles and 500 hours of DVR storage.

Meanwhile, AT&T is phasing out the “DirecTV Now” brand name, replacing it with “AT&T TV Now.” Pricing for AT&T TV Now starts at $50 per month, with about 45 channels including HBO.

The launch of AT&T TV comes after the company reported a 778,000 net loss in DirecTV satellite and U-verse TV customers and lost 168,000 DirecTV Now subs for the second quarter of 2019. In the last 12 months, AT&T has lost about 2 million traditional pay-TV customers, down 8.6% year over year, and DirecTV Now’s subscriber base has shrunk 26%.

The pain will continue into the current quarter: UBS expects AT&T to drop 838,000 premium TV subscribers given program blackouts and subscribers dropping off after their promotional pricing ends. According to Hodulik, in 2020, AT&T TV should help the telco “maintain stability” in the profitability of its Entertainment segment while “sub losses moderate” with the last of the promotional DirecTV subscribers rolling off.

Popular on Variety

More TV

  • Samsung Makes Bid to Keep Viewers

    Samsung Makes Bid to Keep Viewers From Skipping Fox Ad Breaks

    Fox is hoping to knit together the seconds-long divide between a TV program and the commercials that support it. During ad breaks for a few football broadcasts, tomorrow’s run of the Emmys and Wednesday’s season premiere of “The Masked Singer,” the network will kick off ad sessions with special show promos that display artistic renderings [...]

  • Patria

    HBO Europe Unveils ‘Patria’ Footage to Captive San Sebastian Audience

    SAN SEBASTIAN — Amid large expectation, HBO Europe has revealed first footage giving a first sense of tone and pace of its Spanish original series “Patria.” A packed-to-overflowing press conference on Saturday morning at the San Sebastian Festival can be read as one sign of the potential popularity of the eight-part series. The panel sneak-peek [...]

  • Topic Studios

    Layoffs Hit Topic Studios as TV Division Relocates to West Coast (EXCLUSIVE)

    A small round of layoffs has hit Topic Studios this week in the television division, insiders familiar with the company told Variety. One of the insiders said three executives at the New York-based producer and distributor are out: senior vice president of scripted programming and Viacom alum Lisa Leingang, vice president of development Mona Panchal [...]

  • Peter Weber and Mike Johnson

    'The Bachelor's' Mike Johnson on Diversity and New Leading Man Peter Weber

    ABC named its newest star of “The Bachelor” this week, officially making Peter Weber the leading man for Season 24 of the long-running dating show. Social media backlash ensued following the announcement due to ABC’s selection lacking diversity, yet again. Since the dating franchise began in 2002, there has been only one “Bachelorette” of color [...]

  • ABC Studios Logo

    ABC Studios Head of Alternative Fernando Hernandez Exits

    ABC Studios’ head of alternative Fernando Hernandez has departed from his post at the Disney-owned television studio, a source familiar with the situation told Variety. The Hollywood Reporter first reported the news. Hernandez’s exit follows an executive shuffling at the top in recent months that has included the departure of Amy Hartwick, ABC Studio’s head [...]

  • Rob Cowan, Greg Silverman'The Conjuring 2'

    Greg Silverman’s Stampede, School of Rock Team for Unscripted Series (EXCLUSIVE)

    Former president of Warner Bros. Pictures Greg Silverman is partnering with School of Rock through his content creation company Stampede. The collaboration with the music school will create exclusive content, starting with the development of an unscripted series.  School of Rock operates a network of performance-based education franchises that offer students of all ages guidance [...]

  • TV Roundup: Erica Durance Reprises 'Smallville'

    TV News Roundup: Erica Durance Reprises 'Smallville' Role in 'Arrowverse' Crossover

    In today’s TV news roundup, Erica Durance reprises her “Smallville” role in the CW’s annual “Arrowverse” crossover, and Showtime shares with Variety an exclusive sneak peek at the return of “The Circus.” FIRST LOOKS “2020 is the most important election of our lifetime,” Alex Wagner says in a new trailer for the fourth season of [...]

More From Our Brands

Access exclusive content