Bankers Predicting Sale of DTV

Discussion in 'DIRECTV General Discussion' started by CraigerM, May 20, 2020.

  1. evotz

    evotz Active Member

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    I think your last comment is kind of the gist I was getting after.

    Sure, DirecTV can beef up their library... but they need a way to offer it to people that already have infrastructure in place to view that content (like a decent Internet connection and a Roku) for a lower price than to people that do not have the infrastructure in place (live out in the middle of no where without a quality Internet connection). Because if you don't, then you're in the same boat you're in now. Nobody with a decent Internet connection isn't going to pay to gain access to the content that requires unneeded infrastructure to be able to view. Rather than re-invent the wheel - I just proposed that DirecTV could use their existing satellite infrastructure to provide a pseudo NetFlix or Amazon or whatever streaming platform. Instead of paying $12.99 for a NetFlix account, maybe a DirecTV NetFlix account would cost $25 - DirecTV would pay NetFlix $13 for the NetFlix account and keep the $12 for themselves, maintaining infrastructure cost and profit. If someone lives out in the middle of no where without the infrastructure... if they want NetFlix or whatever, I think they'd pay $25/mo for the experience, maybe higher... I don't know what the cut off point would be. I doubt they'd pay $50.

    If DirecTV had their own library, then they'd have to battle all of the other streaming on-demand players (NetFlix, Amazon, Hulu, etc) to get the rights to that content and then would only be able to provide the content that they won the right to, to their infrastructure customers. If you lived out in the middle of no where and liked Seinfeld - then you're still SOL.

    The idea definitely deserves scrutiny and it may not be feasible. I'm just saying if DirecTV is looking for an avenue to remain relevant, that's one to explore.
     
  2. wmb

    wmb Godfather

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    When DirecTV Now first came out, this article that said their operating margins were single digits, much less than the typical 45% for the traditional video business.

    This chart shows how tiny the margins will be on AT&T's new $35 streaming TV service


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  3. slice1900

    slice1900 Well-Known Member

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  4. James Long

    James Long Ready for Uplink! Staff Member Super Moderator

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    From the article:
    So it looks like they planned on losing a lot of money on the Now product - balancing that loss with advertising revenues (selling their subscribers to advertisers). A very streaming company like thing to do.

    Fortunately AT&T has DIRECTV satellite and Uverse to prop up the fledgling service. Unfortunately the service didn't grow into something self supporting.
     
  5. wmb

    wmb Godfather

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    It grew into something. It had over 1.8 million subscribers in Q2/3 2018, before the big price hike. The fall 2018 price hike made it uncompetitive, essentially scuttling DirecTV Now.

    AT&T's Q1 2020 earnings show it's still hemorrhaging video subscribers

    That compares favorably with YTTV’s current 2.3 million and Hulu + Live’s 3.2 million.

    The YouTube TV Thread

    Let’s see if Google and Hulu can now monetize that subscriber base.


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  6. James Long

    James Long Ready for Uplink! Staff Member Super Moderator

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    Something ...
    dtvnow-1q20.png
    It was very slow to launch. I believe it missed the window Now needed to be successful.
    Then AT&T revamped the product and was even slower to launch the replacement!
    Lesson learned - how not to do it.
     
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  7. raott

    raott Hall Of Fame

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    I don't recall the exact timing, but I wonder home much of the huge jump in subscribers in 2017 was due to the "free" Apple TV? That's why I signed up at one point, just to check it out and get the free Apple TV. Then they completely screwed up my HBO Go login so I canceled it.

     
  8. compnurd

    compnurd Hall Of Fame

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    This is true I signed up for 4 accounts during that promo
     
  9. wmb

    wmb Godfather

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    Basically the same marketing plan as AT&T TV, but with an Apple TV instead of a private labeled Roku (more or less). Give people a box, a low rate for a year, then jack up the price year 2. The other differences are the two year contract and explicitly telling people about the price hike up front.

    I wonder if it will turn out differently?


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  10. raott

    raott Hall Of Fame

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    It was a little bit different. It was basically "try the service for three (might have been four) months and we will give you an Apple TV". If I remember right, and the only reason I did it, the three or four month cost of the service was equivalent to the cost an Apple TV (which I was in the market for) at the time.

     
  11. lparsons21

    lparsons21 Hall Of Fame

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    We’ll know in a year. I think that in a year there will be a substantial number cancelling and paying the ETF since the 2nd year prices are so outrageous compared to any other streaming service.

    At the Entertainment sub level, the lowest one with no RSN’s, the math makes for a real bargain. Lots of channels, wide subject matter, HBO/HBO Max included first year, free box and at least a $100 rebate. Do it a year, cancel and pay ETF and the true cost turns out to be $57/month.

    The math is the same for the upper sub levels but doesn’t work out so well because of the additional RSN fee on top of sub cost.
     
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  12. lparsons21

    lparsons21 Hall Of Fame

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    I did it. It was actually cheaper to do that trial to get the AppleTV and was cheaper than AppleTV’s were selling for at the time.
     
  13. slice1900

    slice1900 Well-Known Member

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    But that's the exact same advertising revenue they can make on satellite, at least for customers who have DVRs. Now maybe they plan on inserting even more ads, like they're already doing on Directv with ads in the guide screen and when you pause, or like Tivo has inflicted on TE4 customers with "preroll" ads that run when you play a recording but again that's nothing that cable/satellite providers can't already do to their customers so streaming MVPDs aren't in any particular advantage there.
     
  14. mjwagner

    mjwagner Icon

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    Ads in the guide screen, ads when you pause, ads when you start to play a DVRed show?...those are things?...that people put up with? Yikes!
     
  15. Getteau

    Getteau Icon

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    Filler TV and a true guide is what I missed the most when we spent a couple of weeks at our vacation house last year and I didn't un-suspend the DTV service. We had HBO Now, NetFlix, Amazon, Vudu and a few other things, but I just missed hitting the guide button, scrolling through the guide aimlessly and picking something. While you can do the same thing in NetFlix or Amazon, it's just a lot easier to scroll through the old-school DTV/Cable guide than the Netflix or Amazon interface.
     
  16. wmb

    wmb Godfather

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    That is a good reason for people looking for a streaming service to avoid it as well.

    I wonder how many non-AT&T customers will sign up. I could see it as a cost reduction move for DirecTV and U-Verse as it’s a more or less BYOD. No equipment fees. This may just be AT&T cannibalizing itself.


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  17. lparsons21

    lparsons21 Hall Of Fame

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    Since one of the benefits of streaming services is the ability to cancel and move on, I don’t see it as a big issue on ATT TV except you have to keep it a year to have it make sense.

    Of course one of the downsides to live streaming services is with the DVR if you like to shuffle services, because you lose your recordings just as you do when shifting cable or sat services.

    EDIT: I’m betting that with all the shuffling in live streaming and VOD services going on, that in the next year quite a bit will have changed. The providers will figure out what is profitable for them in both prices and content offerings. Heck, it is even possible that ATT will figure out that the 2nd year pricing is unacceptable for their subscribers and will come up with a better deal.
     
  18. James Long

    James Long Ready for Uplink! Staff Member Super Moderator

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    The article was from 2016 when the price point was $35 - so one needs to scroll back the timeline a few years and see what AT&T planned then and change the verbs to past tense. Guide screen and pause ads are concepts borrowed from streamers. If streamers can make a few extra bucks advertising in the UI why not a satellite provider? AT&T doesn't make over a billion dollars per quarter in profit by missing opportunities to make a little more.

    The article was explaining how they expected to be able to sell a lower priced service with single digit margins (making up the loss via additional advertising). It was a forward looking statement. The plan changed in 2018 and 2019.
     
  19. krel

    krel New Member

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    i don't think ATT will sell DTV. the lady of the office of the president told me it brings em in 2.5 billion in revenue each month!!! sure traditional tv is failing now because of streaming services. but how long will that last before rates increase??? as they have been... more channels = more$$$. i know that broadcasters monitor there systems to see who's watching what and bump those channels into higher tiers.. it's going to be interesting to see what happens as it's all just speculation now..
     
  20. slice1900

    slice1900 Well-Known Member

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    More importantly it generates over a billion in cash flow per quarter. If they do sell it, it won't go cheap. It won't go for the $48 billion or whatever it was they paid for it, but it would go for at least half that which makes Dish buying them a non-starter when they have the big future debt overhang of needing to invest many billions to use or lose their wireless licenses.

    If AT&T gets rid of them, it will be done as a spinoff not a sale. And AT&T TV will go with it.
     
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