AT&T has released their streaming TV service, DirecTV Now, recently and they have been offering promotional prices to attract more and more users to the various packages. The various tiers of DirecTV Now are Live a Little, Just Right, Go Big and Gotta Have It, and the pricings for the packages are 35 dollars, 50 dollars, 60 dollars, and 70 dollars respectively.
The Go Big tier was offered for a promotional pricing of thirty-five dollars, which is now expired, but according to analyst Craig Moffett, AT&T will lose about 355 dollars per user who has signed up for the Go Big tier of DirecTV Now during the 35 dollar per month promotional period.
The figures were first reported in early December, right after the launch of the DirecTV Now service. The report examined the overall pay TV user data of the parent company of the streaming service. AT&T released a pre-earnings document recently and the document indicated that they have grown their pay TV user base in the fourth quarter. The increase in the pay TV subscriber base solely accounts to DirecTV Now.
There were many issues with the DirecTV Now service, but even with all the glitches, it managed to bag around 200,000 new signups. However, Moffett noted that the lifetime value of a traditional DirecTV satellite user is 2,500 dollars, and as the traditional platforms of AT&T, U-Verse and DirecTV are not adding any new users. Moffett calculated that, “The value erosion just from the positive net additions of DirecTV subscribers likely exceeds $70 million.”
AT&T ended their thirty-five dollar promotion of the DirecTV Now Go Big package on Jan 9 and restored the tier price to 60 dollars a month. It is not yet clear how many initial signup of DirecTV Now went with the Go Big package, but it will be safe to assume that most of the early signups went with the promotional deal.
It is reported that AT&T will release their full fourth quarter earnings report soon and we will able to understand on the user base and signups of DirecTV Now only after the release of their full earnings report.