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Discussion in 'DIRECTV General Discussion' started by dreadlk, Jan 30, 2019.
Looks like both Directv and Directv Now took a big hit for Q4.
DirecTV Now subscribers and earnings
And? They flat out just said they lost customers who don’t provide as much profit. I’m sure they are fine with that. Their profit % probably went up if that’s true!
Stupid way to run a business if that is true. Losing customers who are unprofitable....sure...good move. Losing customers because they aren’t profitable enough? Dumb move, when you aren’t replacing them.
Seems as if a lot of customers signed up for the 3 month trial to get the Apple TV free which would have cost more than the 3 month trial. So they lost a lot of customers they really didn't have - just a cheap way to get an Apple TV or other streaming device.
I would think folks will associate the crappy service of D* with D* NOW. I've never considered D* NOW, figured they'd screw that up too.
What did you expect them to say?..."Gee, we have terrible service and folks are bailing out left and right."
You easily see that. I saw it. Why didn't they see it? Of course that's what happened.
Mass subscriber loss on DIRECTV Now should be a concern. That is supposed to be a growing part of their business.
Mass subscriber loss on DIRECTV satellite can be a problem. Gross loss is a normal part of business ... DIRECTV satellite has lost over a million subscribers in a quarter and it has not been a problem. The problem comes when those customers are not replaced. A few years ago (before AT&T) DIRECTV would report high gross loss numbers but would end up with a net gain since they were adding more customers than they were losing. This "churn" was discussed every quarter and it is a major cost of doing business.
Losing a million customers and replacing them with 1.2 million new customers looks good if you're looking at net additions. But with a subscriber acquisition cost attached to each of those 1.2 million new customers it can lead to lower profit than keeping the old customers. A quarter like this where there is a high net loss usually shows that gross additions were down ... which saves DIRECTV the cost of new installations. One sees an increase in profitability in a quarter where there is a net customer loss because they are not spending as much money on equipment and installations.
Focusing on the positives "net customer gain" is very important when there is one and "increased profitability" is very important when profits increase. Doing both at the same time is more difficult.
For the full year DIRECTV satellite lost 1.23 million net satellite customers (-6%), gained 444k DIRECTV NOW customers (+37%) and gained about 50k UVERSE customers (+1.4%). Net Income for the division was down about $756 million for the year. The Entertainment Division still had a $4.7 billion net income for the year.
Directv's real problem can be seen by comparing them to Dish (similar subscriber losses) and FIOS/cable (less subscriber losses)
The problem isn't "because its satellite" its "because those guys bundle internet". Let's say they have the following deal (warning: made up numbers) to get TV for $100/month, internet for $100/month, but you can get both for $150/month. That means if you cancel TV but keep internet from your cable provider or FIOS, you only save $50, which makes you a lot less likely to do it than if you save $100. AT&T's "bundling" with cell phones doesn't work the same way - they can't offer the same discounts because they use separate infrastructure. That is, if you get cable and internet from your cable company, they are both delivered through the same wires so they can do a bigger discount if you get both products.
AT&T really needs to roll out fixed wireless offerings as quickly as possible to follow the 'Directv via IP' product. That will be more similar to cable in that a customer who gets both uses the same infrastructure and they can offer deeper discounts - i.e. the same "$100 + $100 = $150" situation that will make it harder for customers who have both to cancel them. Even if the "list price" for that IP offering is pretty close to what Directv satellite costs for customers who get both they will save a lot less by dropping Directv IP so it should be a "stickier" product than satellite.
Most of the business stuff becomes snake oil when the company is losing revenue. It's simply a parlor trick designed to keep investors looking at the left hand while the right hand is removing a pile of poop from the table!
As you eluded to the expenses involved in adding 1.2 million new customers versus the loss of 1 million customers may not be a great loss but overall it can be spun to investors as not being too bad. The truth is far from that. The 1 million customers you lost are almost all full paying customers that are either at the end of their two year contract or have gone way beyond it. For arguments sake we could say that most of them might be paying between $120 - $280 a month for service and they are just cash cows that deliver milk every month.
The 1.2 million new customers are on discounted package prices that probably deliver very slim profit margins, for example the Ultimate package at $60 a month plus taxes, for the first year. These customers also require a truck roll, wiring and equipment plus loads of tech support to hold their hands for the first few weeks or months. And yes there is a lot of hand holding. The little things that we do automatically to correct an issue will typically be a phone call to CSR for a new customer.
AT&T better get their Directv prices down and their customer service up or else they might have to sell Directv to get from under their debt and to make investors happy.
This morning I read that the average monthly bill for D* is $120. That's more than I thought it would be.
The CEO specifically addressed that, saying they will be more "assertive" in content negotiations, and 7-8% yearly price increases are no longer acceptable for something where subscribers are declining. Somehow I doubt the content owners will agree.
So I predict a higher chance of blackouts in the future, especially for content "customers don't engage with" - I take that to mean less popular stuff like that from Viacom and Discovery, rather than Disney/ESPN.
Yeah, I was one of those folks who signed up just to get the free Apple TV 4K. Except when I did it, just over a year ago, I had to prepay for 4 months, not 3. But still, 4 x 35 = $140, whereas the ATV4K cost $180 from Apple. Plus I got access to $5 HBO, which I was going to pay $15 for via HBO Now.
At any rate, why was AT&T doing deals like that? They were basically offering heavily discounted service to encourage folks to be their beta testers, and to quickly fluff up their subscriber numbers for Wall Street, and to establish DTV Now as a major brand name in the vMVPD market.
I guess the service is now at a point where they don't need to do that. Now that the platform is pretty much built, the focus is on maximizing its profitability.
That's not hard to believe. I have Choice Extra Classic and two SD DVRs. My bill in January was $123. The February bill will be $131.49. I feel as though I'm reaching the tipping point, I'm really not getting much for my payment.
It also helped them stress test the platform with people who didn't have much skin in the game so weren't as likely to complain about problems, or missing features like the lack of cloud DVR at first.
Now that they feel (I assume?) that they have it working pretty well, they are done with giveaways and trying to make it profitable.
Exactly. As I said, in the early days, we were beta testers. So when a live channel would briefly flake out or cloud DVR recordings would play back with garbled video or audio, I'd just shrug and say, "Well, I really was just paying for the Apple TV. The service is essentially free."
BTW, today's call was the first time in awhile that the CEO didn't make any mention of the upcoming "home-centric" streaming DTV service with the "thin client" box (i.e. the C71) that's currently being beta tested. Last I recall him mentioning it, late last year, he was pegging its launch for late Q1.
I used DirecTVNow for a couple of months exclusively to see if it could replace satellite, but finally canceled when I found that it had too many outages and quirks in the various apps. I've been monitoring the @directvnowhelp Twitter account and I see the same very familiar issues and canned "we're still working out the bugs" responses, so I still don't think it's there yet.
If they didn't have the best channel availability for me, I'd just go with one of their competitors (which seem to perform better) and be done with satellite, but while I'm willing to accept some inconvenience to save $50/month, I found DTVNow to be too unreliable. I've dropped my satellite services down to the lowest level available and my bill is still over $100/month.
Right now in Arizona COX is offering their basic 120 channels, a basic DVR and 100gb internet service for $89.99 mo. For the first year.
If it was still on for Q1 I'm sure he would have mentioned it, so it has obviously slipped.
I tried that, by the time they were done with all the fees and taxes for boxes, sports, able to record more than 2 thing or watch two things the price was really $143
Very tricky, they wont give you the hidden prices on the web, have to call or go to a store.