DirecTV Now, the new OTT-TV service from AT&T, is still on track for a Q4 launch, and will come out of the chute with a lineup of more than 100 channels, Randall Stephenson, chairman and CEO of AT&T, said Wednesday at the Goldman Sachs Communacopia Conference.
“We are very close,” Stephenson said of the launch, noting that it will be an app-based service with no truck roll requirement, while also giving a nod to zero-rated mobile data policy that is baked into the economics of the service – DirecTV Now streams delivered on AT&T’s mobile network won’t count against a customer’s data plan.
“We’re talking 100 plus channels at a very, very aggressive price point. And when you buy this content, the data required to stream it on your mobile device is incorporated into the price of the content,” he said, adding that the service is about “90% there” with respect to carriage agreements with programmers. Recent AT&T renewal pacts with programmers have added channels from NBCUniversal, HBO, Disney and, Scripps Networks Interactive to the upcoming OTT mix.
RELATED; Turner, AT&T Renew Carriage Deal
Stephenson was also pressed on the OTT service’s cost structure (Comcast, for example, has argued that the economics of an OTT TV offering don’t add up), but the AT&T exec is confident that the model will work because it uses a completely different cost structure than a more traditional MVPD offering.
“This is a very, very low cost customer acquisition product. It is a very low cost to install product meaning the customer has just done it once they downloaded the app. There are no set-top boxes, they are no truck rolls involved in this,” he said.
Stephenson also acknowledged that DirecTV Now could cannibalize the existing pay TV sub base, but said measures are being taken to limit that exposure in the short-term with a model that limits a subscriber’s access to one or two streams.
“I do think, yes, that there is risk of cannibalizing the existing product. And I think that’s always a good sign,” he said, noting that DirecTV Now will be targeted to what he estimates to be 20 million homes without a pay TV service.
“We think a significant number of those would like [a] 100-plus channel, pay TV subscription, if or at a very, very attractive price point.”
Pricing for DirecTV Now has not been announced, but the margin on it will be “thinner than we we’re accustomed to,” Stephenson said. “But I’m always willing to take thinner margins, when there is low capital intensity in the product.”
Stephenson was also confident that DirecTV Now will be able to scale to meet the streaming demands.
“We're not trying to do something where you just get buffer fatigue while you're waiting on content,” he said. “We want this to be an…MVPD-like experience on a mobile device. And we feel pretty good we're going to be able to pull that off.”
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.