DirecTV Now sheds more than 250,000 subscribers in a single quarter

What a difference three months makes. At the end of 2017, DirecTV Now — the streaming subscription offering from AT&T aimed at staunching the flow of cord-cutters leaving the company’s satellite service — had more than 1 million subscribers and was rapidly adding new sign-ups. It reached a zenith of 1.86 million at the end of 2018’s second quarter. That frenzied expansion has come to an end it seems, as the latest numbers painfully illustrate: Over the course of the fourth quarter of 2018, the service lost 267,000 paying customers. Its current subscriber count sits at around 1.6 million.

Why the sharp decline? AT&T attributes it to the people who signed up under the company’s promotional price plan, then decided to leave once that discounted rate ceased. The quarterly report notes that there are no longer any customers on the discounted promotional offer and that the number of people on its more expensive plans has remained stable.

To many, this turn of events signifies just how difficult it can be to turn a profit in the live streaming TV landscape, where consumers are more or less free to jump from one service to another as easily as they can buy something from Amazon. With no contracts and no specialized hardware like set-top boxes or satellite dishes, the barrier to entry (and exit) is extremely low.

But it’s not just the ease with which customers can switch that’s likely driving churn at DirecTV Now. The price of the service and what if offers for that money is likely under intense scrutiny by subscribers as they get used to the new streaming landscape and start comparing DirecTV Now to providers like Hulu, SlingTV, YouTube TV, and several other competitors.

DirecTV Now’s prices have risen in recent months, and are expected to rise again, while AT&T’s CEO Randall Stephenson said the company is attempting to “thin the content out.” Google’s YouTube TV may end up acquiring a significant share of DirecTV Now’s customers. The live TV service recently announced that it had expanded its coverage area to 98 percent of U.S. households, just in time for this year’s Super Bowl. It also announced that it had added key local broadcasters in many of its markets, which has always been one of DirecTV Now’s greatest strengths when it comes to competing for cord-cutters who might be anxious about losing local news and weather.

It’s still too early to say that the fourth quarter losses are an indicator that DirecTV Now can’t compete, but we suspect it has learned an important lesson about the prices people are willing to pay for a satellite or cable alternative.