On Wednesday, AT&T officially launched DirecTV Now, its long-anticipated over-the-top (OTT) video streaming service that will provide customers with 100 live and on-demand television channels at an introductory rate of $35 per month. DirecTV Now is the newest product in an increasingly competitive field where multichannel video program distributors (MVPDs) are jockeying with online service providers to attract “cord cutters” and “cord nevers” who eschew monthly MVPD subscriptions in favor of low or no-cost video content which can be streamed through their PCs or mobile devices.
Officials at AT&T, the nation’s largest provider of pay TV services with 23.5 million subscribers, confirmed that the company is targeting the estimated 20 million U.S. households that have surrendered their MVPD subscriptions or have never had one, although existing DirecTV subscribers (who reportedly pay an average monthly price of $110 for their service) could also opt for the lower-cost DirecTV Now offering. In addition, in an enticement that may attract new subscribers to the AT&T wireless service, AT&T has affirmed that AT&T mobile customers will be able to stream DirecTV Now content on their cell phones without charge to their monthly data allowances. Although the FCC recently voiced concern that AT&T’s policy of “zero rating” DirecTV Now content could harm consumers by “constraining their ability to access existing and future mobile video services not affiliated with AT&T,” AT&T Executive Vice President Bob Quinn told the FCC in reply that the service complies with the law and will boost competition, maintaining: “the video entertainment marketplace is ripe for disruptive change that benefits consumers.”
AT&T has struck content deals for DirectTV Now with several major programmers. A spokesman told reporters that customers in some markets will even be able to access their local broadcast television channels through the service. Eventually, AT&T intends to raise its introductory price for the 100 channel package to $60 per month and to offer several channel bundles that will range from $35 per month for 60 channels to up to $70 per month for 120 channels. Explaining that DirecTV Now aims “to find the cord-shavers and the cord-nevers,” AT&T Entertainment Group CEO John Starkey said his company’s goal is “to establish a relationship with those customers on premium content, and then grow that relationship . . . over time.”