Coming off a Q3 that resulted in the loss of 89,000 net video subscribers, AT&T believes that the tide will turn in the current quarter.
“We expect a net addition to our total video customer base in the fourth quarter, with improvement coming from linear TV,” John Stephens, AT&T’s senior EVP and chief financial officer, said Tuesday on the company’s Q3 call.
He noted that Q3 video losses were driven by severe storms and a tightened credit policy focused on overdue accounts (causing an accelerated rate of involuntary churn), adding that those issues contributed to nearly half of the decline in “traditional TV” losses in the third quarter.
“We see those impacts easing in the fourth quarter,” Stephens said, noting that expected video improvements won’t come from special offerings and promos in a significant way by comparison.
Stephens said AT&T is encouraged by DirecTV Now, which added nearly 300,000 subs in Q3, extending its total to almost 800,000. He said about 700,000 of them are new to AT&T.
He said AT&T has also kicked off a beta trial for a next-gen software platform for DirecTV now that aims to drive up ARPU and improve margins by including new capabilities such as a cloud DVR service, the ability to add additional streams to the OTT TV service, and access to pay-per-view events and movies.
Regarding the cloud DVR offering, Cord Cutter Newsreports that an email DirecTV Now has sent to customers suggests that the company could end up charging extra for a service it’s calling a “True Cloud DVR” that might include extra storage or other premium features. Beta testers currently have access to a cloud DVR with 100 hours of storage as part of the service.
Stephens said the plan is to launch the new software platform “widely” in early 2018. The plan is also to factor in more data insights that can drive more targeted advertising opportunities
“We’re confident in the direction we’re heading,” he said.
Stephens also said that AT&T expects to close its pending acquisition of Time Warner Inc. by year-end.
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