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03 Nov

Will DirecTV Now Be A Flop?

DirecTV

DirecTV Now

AT&T has officially announced the pricing model of their DirecTV Now streaming service and it is fixed at thirty-five dollars for a month. Users will feel paying thirty-five dollars for a Google Chromecast device an easy one, but the case of DirecTV is a different one. Thirty-five dollars is the confirmed baseline fee for the service, which is an odd price point for the service.

Thirty-five dollars is a high enough monthly charge that the users will think twice before subscribing. This will pose a high barrier to DirecTV Now entry than for the services like Netflix, Hulu, and other over the top offerings like the new Starz app and CBS All Access.

Leaving aside Netflix, Hulu, and Amazon, all of which have a head start on OTT entrants, there are reasonable comparisons to be made between DirecTV Now and other OTT services. The comparison shared below will show you the cost of competitive OTT apps, together with an estimated number of subscribers and the time for which they have been in business.

Service Baseline fee/year Estimated subscribers Time since launch
CBS All Access 6 dollars 1 million+ 2 years
Showtime 11 dollars 1 million+ 16 months
Starz 9 dollars 1 million 10 months
HBO Now 15 dollars 1 million 19 months
Sling TV 20 dollars 600,000 21 months
PlayStation Vue 30 dollars 100,000+ 7 months
DirecTV Choice Package

Over The Top Services

Apart from the variables that are discussed in the chart, there are many other factors that determine the take adoption rate of an OTT service, including the place of availability of the service, the type of content being offered and the marketing efficiency of the service. Still, the numbers suggest a pattern. As price of service go up, customer numbers go down and this can be understood from the table.

The above trend is not good for the DirecTV Now service from AT&T. For people who wish to have alternative bundles, thirty-five dollars would not be cheap enough. If this trend holds, AT&T will have to attract those subscribers who already pay for bigger bundles and if they are lucky enough, subscribers will come from their competitors; else, they might cannibalize their regular DirecTV subscribers.

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