AT&T shared the news that their upcoming streaming TV package, DirecTV Now, would be offering 100+ channels for just thirty-five dollars per month. “DirecTV Now will be delivered over the internet wherever you are – no cable or satellite required – and the $35 would also cover any mobile data you use while watching TV on your phone,” AT&T CEO Randall Stephenson said in a press release.
The price of the package is way below what was expected by analysts. Their expectation was around 50 to 55 dollars, but the pricing of AT&T seems to undercut the price and value proposition of their competitors like PlayStation Vue and Sling TV. The announcement of AT&T made many to ask, “How the heck can it be so cheap?” Many of the industry insiders and analysts shared their opinion about the low price and their findings are shared below.
The first important thing to notice is that even though DirecTV Now offers 100+ channels, the exact channel lineup is not yet announced. Stephenson characterized it as “all the premium content you like to watch,” and added, “This isn’t the junk nobody wants.”
It seems to be true from the reports. AT&T has signed deals with Discovery, HBO, Turner, NBC Universal, Disney, Viacom, Scripps, AMC, STARZ, and so many channels. Moreover, DirecTV Now will have all the big guns on board when it is launched. Still the 100+ channels catalogue could be a mixture of throwaway ones, as we still do not know the composition.
AT&T has signed a string of new “multi-platform” deals in the previous months to get the channels on DirecTV Now. Some of these deals were renewals, whereas others were made exclusively for the streaming service. Yet again, DirecTV Now at a price of thirty-five dollars does not mean that AT&T paid less to get the streaming channels than they do on their traditional pay TV packages.
“Media companies wouldn’t expect a different price point [on the streaming deals],” RBC analyst Steve Cahall tells. One thing that could have helped AT&T to have a better price for DirecTV Now is its scale. The pricing on these deals usually depend on volume and this could offer AT&T advantage over competitors who are planning to jump to the market.
This is another thing that can help AT&T to cut the costs. DirecTV Now will have a mix of advertising innovations at launch. It is expected that there will be ads that are sold in the traditional way and ads that are inserted by AT&T in a dynamic way. This method is similar to that of Sling TV.