AT&T, Via DirecTV Now, Vying for 20 Million Customers It Hasn't Previously Touched

“We want to see customer growth,” said Stankey in Q&A. He cited segments where AT&T is currently “underpenetrated” -- customers who couldn’t pass a credit test in the past or didn’t want to be married to a contract, cord-cutters and cord-nevers. The company wants a “disproportionate share of our customers to come from that base,” he said. “We want happy customers,” a standard which the company will evaluate based on churn levels, but the idea is to provide customers video content on their terms, including how, when and where they want it, he said: “It has to be a good enough product that they like it, they stay with it.”

It's most important to grow the business overall through a deeper relationship with customers, said Stankey. “We don’t want them just to have a product from AT&T," he said. "We want them to have two products from AT&T.” As the entertainment offering develops, “we want them to understand the benefits of using AT&T for their wireless service with a premium entertainment product or getting an AT&T broadband solution with this.” The company is making that easier for wireless customers by eating the cost of data streaming for customers using DirecTV Now via their mobile plan. That has drawn FCC scrutiny.

The much-hyped $35-a-month service for 100 channels is a $60-value promotional package that doesn’t currently have a cut-off date, said Brad Bentley, chief marketing officer at AT&T Entertainment & Internet Services. Customers who sign up early will be grandfathered in at that price as long as they remain on contract, but prices will go up as content costs increase, said Bentley. DirecTV Now is broken out into four tiers that go under names: “Live a Little” ($35 per month for 60-plus channels); “Just Right” ($50 per month for 80-plus channels); “Go Big” ($60 per month for 100-plus channels) and “Gotta Have It” ($70 per month for 120-plus channels). HBO and Cinemax will be available for $5 each per month to customers who choose the base package.

The telco-TV provider reached content deals with all the major networks except CBS, Stankey said. “We continue to work with them,” said Stankey. “Whether or not we get to an arrangement with them remains to be seen.” Citing agreements with the other three networks, Stankey said, “Obviously we know how to get the transactions done. We have three of the four network groups that are willing to bring their content to us in a way that we think is reasonable and right for our consumers, and we’re hopeful and optimistic that we’ll get to a similar place with CBS down the road.” He said DirecTV Now is targeted to a demographic that “might be attracted to this product that maybe fits well without that content. We’ll see over time.”

A slide during the presentation showed participating content providers as including Disney/ESPN, AMC, A+E, Turner, HBO, Viacom, NBCUniversal, Fox, Starz, Scripps Networks, Univision, Discovery, Hallmark, Fuse, Bloomberg and Revolt. DirecTV Now has rights for all the owned-and-operated stations for the three network groups it carries, Stankey said. With the rights, customers can get the channels in local markets “because they have rights to the premium content that they run during prime time, even if you’re not in an owned-and-operated market, you’ll have the on-demand content available to you after the window expires for Day One,” he said.

Hours before the AT&T launch event Monday, Sling TV announced an invitation-only cloud-based beta DVR service for Roku users. Sling TV called it the “only OTT cloud DVR with no 28-day restriction on recordings.” At launch, the beta program offers up to 100 hours of DVR storage at no charge, with plans for a phased rollout of additional device platforms over the next few months.

In response to our question on DVR capability with DirecTV Now, Stankey said: “Our plans are to bring DVR as the next iteration of the product.” In 2017, DirecTV Now will have a “huge, rich on-demand library” with current-season stacking capability and 72-hour viewing window that’s currently available on DirecTV content, he said. “Full DVR functionality" looms next year, he said. Bentley said the initial offering is “what we’re launching with. There’s a whole product roadmap of how this thing will evolve” with additional features and functionality, Bentley said.

AT&T will keep the DirecTV satellite service as its premium offering, delivering 4K video resolution, said Stankey. That includes the Genie HD DVR and 5.1-channel audio, said Chief Technical Officer Enrique Rodriguez in Q&A, though DirecTV Now will be continually evolving and adding new functionality and features. The satellite service will also still retain the DirecTV Sunday Ticket NFL package for now, said Stankey, but AT&T is working with the NFL “to see if there’s an option to do that.”

Cross-device viewing capability fulfills a promise made several years ago from the OTT industry for “anytime, anywhere” viewing, AT&T said. DirecTV Now users can watch a program on a smartphone and pick it up on a compatible TV when they get home from the same point where they paused, it said.

At launch, the DirecTV Now platform will be available via Amazon Fire TV and Fire TV Stick; Android smartphones and tablets; iPhone, iPad and Apple TV; Chromecast (Android at launch and iOS in 2017); Google Cast-enabled LeEco TVs and Vizio SmartCast TVs; and Internet Explorer, Chrome and Safari Web browsers, said the company. Next year, AT&T plans to bring along Roku devices and TVs, Amazon Fire tablets and Samsung and other brands of smart TVs, the company said.

Various incentives are available at launch to entice customers to try the service. Customers who pre-pay any three-month plan get a free Apple TV, and one month of pre-paid service nets an Amazon Fire TV Stick with Alexa voice remote. For a limited time, customers can get one month of DirecTV Now service when they buy a Lenovo laptop with an Intel Core i3, i5 or i7 processor. LeEco is offering DirecTV Now service with the purchase of its smartphones and several models of its TVs, AT&T said.