AT&T released their DirecTV Now service recently and they are offering the new 100 channel bundle for just thirty five dollars a month. Experts say that this price will go up to sixty dollars per month in the near future, but the early subscribers of the bundle will be locked in for the thirty dollars pricing deal. Some say that the catch here is that AT&T has the rights to make adjustments in pricing as needed when the content expenses go up.
AT&T seems to be interested in offering a complete bundle and their current strategy could leave the price conscious users looking around for other options. Some of the other streaming services follow a different approach in pricing and this could make their packages more enticing to the users who are looking to spend less. It should be noted that Sling TV from Dish and PlayStation Vue from Sony have made efforts to keep the subscription charges low by working with the different media companies to make changes in what is offered and the charges.
The cost estimates for DirecTV Now by analysts indicate that it will be almost impossible for AT&T to make profits on their standard thirty-five dollars per month pack of sixty channels. Analyst Craig Moffett says that the programming cost for the base package is thirty dollars per month. This, together with the subscriber acquisition costs, processing fee of the credit card, and the streaming costs, will give only negative margins to AT&T.
Experts also say that AT&T will not be able to drop some of the channels from their low priced packages. Dropping channels would risk the customer base and would likely break contracts made with the various media companies. Many networks like ESPN from Disney have pushed to include their channels in to lowest tier of pay-TV bundles to control the loss of subscribers. If AT&T wishes to keep the prices low and make more profit, then they will need to drop a whole list of channels.
During their press conference, an AT&T spokesperson said that the DirecTV Now service targets the 20 million Americans who are not part of any of the pay TV services. These are people who do not have credit scores to qualify for any pay TV subscription plan, live in buildings where U-Verse or DirecTV does not serve, or make changes to their living conditions and situations too often for long term contracts to work. DirecTV Now looks to serve those who look for cheap television options, and want cable, but cannot get one.