The leading Telco giant, AT&T, has already announced that their latest streaming service, DirecTV Now, will be available to subscribers by the end of this month. It is reported that AT&T had planned to launch their streaming service a few years ago, but they had to put the plan on hold until they acquired DirecTV, one of the best cable providers in the country.
Reports indicate that AT&T will promote DirecTV Now heavily, and the streaming service will be available to subscribers at just $35 per month. Another major highlight of DirecTV Now is that it will offer more than a hundred popular channels. This is undoubtedly one of the best offering from online streaming services and it is evident that DirecTV Now will attract numerous subscribers to their offerings.
Although Sony’s streaming service, PlayStation Vue, also offers 100 channels, subscribers have to pay $55 a month in order to subscribe to this platform. On the other hand, the basic package from Dish Network’s Sling TV is available at just $25 a month, but it offers just 40 channels to subscribers, and Sling TV subscribers need to pay extra in order to add more channels to their package.
Latest reports reveal that an Amazon Fire TV Stick or Apple TV streaming device will also be available to the customers who subscribes to DirecTV Now for three or more months. It is expected that DirecTV Now will enable AT&T to tap into more than 18 million US TV households, who do not own a pay TV connection currently. Experts also claim that AT&T’s streaming service will have a lower margin than the current pay TV products of the company. However, the contents costs will continue to remain the same.
One of the major challenges AT&T will have to face is that the estimated gross margins for DirecTV Now is in single digits, while the other regular video products of the company acquires a monthly ARPU of approximately $119 with gross margins close to 45 percent. In addition to that, there is a chance for the migration of high-value pay TV users of AT&T to DirecTV Now’s lower-priced streaming bundles.
These things might negatively affect the overall profits of the company in their entertainment unit. However, AT&T can enjoy a few advantages through DirecTV Now, one major benefit being that the company will be able to cut down maintenance and installation costs of the equipments.