Will DirecTV Now Save ATT from Cord Cutting Losses?
Industry leaders predict that pay-TV will go the way of the corded phone, becoming less of a necessity and more of an antiquated novelty.
It’s no surprise that satellite television services are losing just as many customers as traditional cable providers like Comcast. Fortunately for parent company AT&T, DirecTV has found a way to minimize its financial losses.
It seems that DirecTV Now came out at just the right time to save the satellite provider from ruin—meeting the consumer’s needs for more flexible entertainment. While AT&T has continued to report subscriber losses in one area, they’ve also gained around 312,000 new customers via their streaming service.
This has allowed then to maintain their subscriber base while refocusing their attention on the cord cutting market. AT&T has reportedly offered a lower costing internet service that can be paired with DirecTV Now to create a cohesive package of customizable entertainment.
According to the Los Angeles Times, it hasn’t been all positive for AT&T. They aren’t ready to place the future of their company on a product that isn’t as profitable as their usual offerings. Part of what makes DirecTV Now so appealing is the lower cost combined with the programming availability.
Unfortunately, this low-cost doesn’t exactly make it the star of the show for the telecommunications empire. While cord cutting may be the future of entertainment, it requires a much larger customer base in order to keep these companies at the financial level that they’re accustomed to.
Meg James of the Times writes, “The problem is lower-cost products like DirecTV Now are not as profitable for AT&T. For example, the company’s entertainment group, which includes DirecTV, generated $8.4 billion in revenue for its video products in the quarter. That was a 7% decline from the first quarter of 2017 when video entertainment generated $9 billion.”
This indicates a serious gap between the growing subscriber base and its ability to generate an equally potent profit margin. In order for these companies to continue to be successful, they’ll need to completely embrace the idea of cord cutting and offer up a number of other products that can be attached to more revolutionary forms of entertainment.
Industry leaders predict that pay-TV will go the way of the corded phone, becoming less of a necessity and more of an antiquated novelty. As more companies begin to create products designed for mobile entertainment, we’ll continue to see a drop in the number of traditional cable and satellite subscribers.
In order to stay relevant in a quickly changing world, these companies will need to shift their resources into creating the type of product that consumers are asking for. This means embracing mobility and flexibility and relinquishing control of bloated cable packages with price tags high enough to turn consumers off entirely.
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