So, I made a casual inquiry about AT&T TV

Discussion in 'DIRECTV General Discussion' started by TDK1044, Jan 25, 2021.

  1. TDK1044

    TDK1044 Godfather

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    With streaming being the future, it's difficult to see how D* would be sustainable for more than about 10 years. It would be a very expensive operation to just offer the service to those who don't have high speed internet. Given that, I'm not sure why anyone would want to purchase it. It would be like purchasing a lease.
     
  2. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    Based on attribution rate, AT&T will run out of customers in 2027. Losing 3 million customers per year is not sustainable.

    The ongoing costs of maintaining satellite operations is not that expensive. AT&T's biggest expense is programming - which needs to be paid whether the content is delivered via satellite or Internet. The uplink centers have been built. The satellites have been launched. Operationally AT&T just needs to keep the equipment running.

    The downside to satellite is that AT&T needs to keep the equipment running regardless of the number of subscribers they have. One million or one hundred million, the backend for getting the signal to customers is the same. The downside to streaming is that every active stream is a cost to AT&T. Increase the number of subscribers or streams per subscriber and streamers have an additional cost. Satellite is already delivering hundreds of streams to every subscriber's home. Just add receivers - and charge per outlet to offset the receiver cost.

    I have compared it to the "buy your settlement" companies. The kind of companies that advertise "it is my money, I want it now" who buy long term settlements and give people an instant payout.

    AT&T Video cleared $1.7 billion dollars in 2020. They cleared $2 billion in 2019. Collecting an average of $137.64 per subscriber per month they manage to keep 6% of that for themselves. Sure, that number could be higher - before DIRECTV was purchased by AT&T they were clearing as high as 18% of their revenues as profit. They were also a satellite only company - no UVERSE/streaming back in that day.

    $1.7 billion income per year is not lousy - it is the smallest part of AT&T Communications Group, but it is still money rolling in. A smaller company might APPRECIATE the profit that AT&T Video (including DIRECTV) makes. It would be an interesting bet to make - a buyer who believes that they can do a better job of running DIRECTV than AT&T. So far AT&T has not found anyone who will take that bet under the terms offered.
     
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  3. harsh

    harsh Beware the Attack Basset

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    Attrition rates don't work that way. AT&T TV Now demonstrates that with a declining customer base, so go the losses as there aren't as many customers left to lose. Of course the ETFs play a part in that but at this point, those subject to an ETF probably don't make up a large percentage of the DIRECTV subscriber base.

    I expect that the subscriber losses will be more influenced by other factors. Giving up (or losing) the NFLST deal will (not if) be a severe blow. Receiver options not improving will have an increasing impact (especially if the installed base of receivers starts reaching EOL and there's nothing to replace them). DIRECTV's negotiation mace will have a lot less impact going forward leading either to reduced or even more expensive programming.
     
  4. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    Losing 3 million customers per year is losing 3 million customers per year. If one starts with 17 million and subtracts 3 million several times one is going to hit zero in a few iterations. If the 3 million per year rate is maintained the only year they will lose less than 3 million is the last one (when less than 3 million would be left to lose).

    If I had said "losing 4% of their customers each year" one could argue that the net subscriber COUNT loss would decrease over time. But one would need to be an idiot that didn't read what was posted (an attrition rate of 3 million per year) to make that argument in this case.

    There are plenty of influences that could accelerate or decelerate the rate of customer loss. Losing NFL Sunday Ticket certainly will not help with keeping and attracting customers. In my opinion ST is one of the major reasons why AT&T can charge an average of over $137 per month and stay in business. RSNs and HBO are two other factors but with AT&T's marketing people can get HBO Max regardless of what other companies they subscribe to - it isn't unique to DIRECTV.

    2027 is not intended as an exact prediction of the last year of DIRECTV. It is just a simple statement. You can't keep losing 3 million customers per year and expect to stay in business. That loss rate must be curtailed for the service to remain alive. (Unless you want to keep the service running with no subscribers.)
     
  5. harsh

    harsh Beware the Attack Basset

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    A loss of 3 million customers is a statistic, not a rate. "Attrition rate" is defined as the number of units lost as a percentage of units you started with. If they lose 3 million subscribers each year, their attrition rate is accelerating exponentially because the number of units remaining decreases.

    Only an idiot would expect that AT&T will experience a ongoing annual loss of 3 million subscribers. That said, it may be reasonable to guess that this years losses may also be around 3 million (an 18% attrition rate).

    In fact, the 2019 losses were 3.4 million subscribers so the trend would seem to be that the number of subscribers lost is decreasing but the attrition rate is increasing only marginally (15% to 15.4%). The rate in 2018 was only 6% further calling into question any suggestion that a sustained "3 million subscriber loss" is even a thing.
     
  6. studechip

    studechip Godfather

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    Seriously?
     
  7. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    There are some people who do not understand the English language and others who choose to be obstinate. Rates do not have to be a percentage.

    Losing 3 million customers per year is not sustainable. If that rate can be reduced good for AT&T.
    It is a simple statement - not a prediction of future events. Please read ALL of the words written.
     
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  8. ThaPhenom

    ThaPhenom Mentor

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    I'd be interested to see the difference in operating and replacement cost for satellite infrastructure from buildout and launch to end of life vs streaming (cloud infrastructure, bandwidth, etc.) over the same time frame for the same number of customers.
     
  9. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

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    In general, satellites are not a per customer scalable expense. If one wants to operate a 500 channel satellite system one is going to need to design and build a system that receives all 500 channels from sources and retransmits them to satellites with the capacity to handle that number of channels. One customer or one billion, a 500 channel system costs the same. Fortunately DIRECTV built their system as they grew to 25 million customers and the satellites last several years so they had plenty of income to cover that expense. The ongoing expense is minimal.

    Streaming is easily scalable. In today's marketplace most companies will turn to a cloud service as their content delivery network. As demand increases it is easy to spin up a few more servers and add more bandwidth to serve it. If the customers don't come as fast as expected it is easy to scale back services (within the terms of their contract with the CDN).

    So "over the same time frame for the same number of customers" ... Pick high numbers for subscribers and years of service and satellite easily wins. Pick lower numbers and streaming has a chance. Add the third variable of how much content is served simultaneously (number of streams instead of number of customers) and it becomes more apples and oranges - every site with a receive dish could watch any satellite stream at any time - with enough receive equipment one site could watch all 500 streams 24x7x365 without placing a burden on the transmission network. Streaming services limit the number of streams and operate on averages and peak usage. The math is different.
     
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  10. slice1900

    slice1900 Well-Known Member

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    It costs around $300-$400 million to build and launch satellites of the type Directv has. They have a core fleet of five that should remain functional until at least 2030, so building/launching new satellites costs them $0 at this point.

    If they did have to launch one, you can divide out that cost by the number of subscribers and see that unless they got down to only a few million subscribers it simply is not that expensive considering they typically have a life of at least 20 years.

    As for cost for streaming, since the cost of each additional satellite customer is $0 the cost of each additional streaming customer is obviously higher whatever the actual dollar figures. The reason AT&T wants to push AT&T TV over Directv is because they don't have to send someone out to visit your house and install a dish, run wire, provide all the receivers, etc. so it is FAR cheaper to install an AT&T TV customer, and that install cost has to be amortized over the life of the customer - though the $15 advanced receiver fee and $7 per TV more than pays for that as well as the amortized cost of the equipment so it is accounted for in the lower price you pay for AT&T TV.

    It is pretty clear that post-install, AT&T is making a lot more money off the typical Directv customer than the typical AT&T TV customer, at least at the list price. Once you figure in the discounts some customers get who knows.
     
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  11. ericknolls

    ericknolls Active Member

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    After DirecTV loses all it's satellite customers - they are going to go to another provider i.e. streaming, app or set top box. Prices will go up when these other media types start gaining subscribers. I think if they keep the packages small or skinny they can make money. If they are just going to make the packages the same size as their predecessors just compounds the problem of higher rates and yearly increases. If this is the case - why leave DIRECTV? We understand some of AT&T's reasons to move away from Satellite and move on to streaming. But, Is this strategy working for them?

    I'm not sure what is really going to happen when satellite goes the way of the dinosaur. Just like TMobile buying Sprint - is doing what for the cellular industry? Cell service is high. Yes - there is competition but, cell service and home internet is much more expensive then overseas. I see these companies just poaching off of each other. Now - 5G is here and these companies can not tell us why we really need 5G other than to say it is not about speed but capacity. <--- That's a very convincing reason to run out and get this service. Huh?

    Sent from my moto g(7) using Tapatalk
     
    Last edited: Feb 4, 2021
  12. NashGuy

    NashGuy Well-Known Member

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    Coincidentally, a couple years ago, I predicted 2027 as the most likely year when residential DBS TV service would cease operations in the US. But I did hedge by saying it could happen at any point within a couple years of that, i.e. anywhere from 2025-29.

    We'll see. Lots of factors at play, including the availability of major sports outside of linear cable channels, plus the degree to which broadband penetrates rural America in the 20s thanks to LEO satellite (e.g. Starlink), 5G, etc.

    But at some point, and I don't know what that point is, there just won't be a sufficiently large enough group of consumers willing to pay whatever residential DBS TV costs for it to be sufficiently profitable to continue operations. But before we get to that point, we should see the merger of the DirecTV and DISH businesses.
     
  13. Davenlr

    Davenlr Geek til I die

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    Could DirecTv, at the point when their high speed customers could be switched over to ATT-TV, not begin converting to HEVC codec, allowing for high quality video and many HD Channels to be combined on the 101 satellite for all their rural customers who dont have high speed internet, and allowing them to rent out space on their 99 and 103 satellites to services getting kicked off C band to make room for cell phones?

    People who already have dishes would be required to purchase an HEVC receiver or DVR (currently $99 at Best Buy), or a self install kit could be sold like when DIrecTv was originally sold. Get rid of the installers, or charge out local installers on a per install basis for those that cannot do it. Costs would be greatly reduced by not having locals, and the dish install kit could come with an antenna. ATSC 3.0 is going to have greater range than current ATSC 1.0 anyway.
     
  14. JosephB

    JosephB Icon

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    I think there is a much longer tail on linear TV than everyone thinks. It's not going to be absolutely out of business in 5-10 years. I think within 5 years you see the legacy Dish Network business split off from Sling TV and Dish's wireless service and whoever buys DirecTV buys that legacy Dish business and merges them together. By then Starlink will be fully operational and Amazon's LEO internet service will be getting off the ground, along with the home internet T-Mobile has promised to roll out. That will dramatically decrease the number of homes who can't get TV from the internet

    But, even with basically every home in the country having internet available, there will still be a market among some people for linear TV. There will be a population of people who don't want to use an app, can't use an app, or otherwise just want TV to work how it always has. What's left will probably look more like Orby than DirecTV of the 2000s, or more like multicast ATSC subchannels, but it will still exist

    This type of thing is what the traditional TV companies should've done in the late 00s and 2010s. A lot of people cut the cord because of costs, but also because the experience of traditional TV sucks. We're over the hump and it's all downhill from here but if traditional TV providers (and the content companies that run the channels) had their heads on straight they would've improved the experience ten years ago and they could've squeezed a little more money out of linear TV. In the grand scheme of things, technologically linear mass broadcast TV services still makes sense. Every stream over the internet adds more and more bandwidth needed, where with cable or satellite 1 or 1 million people watching take up the same bandwidth. It's sad that we are going to lose a great multicasting infrastructure without building that into the internet. it will result in a lot of wasted resources over time
     
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  15. NashGuy

    NashGuy Well-Known Member

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    Yeah, I pretty much agree with what you're saying here. I'm not predicting that linear channel TV will go away (at least not in this decade, maybe never). But it will constitute an ever-dwindling part of the nation's overall video diet. And as more and more US homes gain access to broadband, with all of the different video options that brings (including streaming linear channel services like YouTube TV and AT&T TV, as well as SVODs and free AVODs), the number of homes who opt for or stick with DBS-based cable TV will continue to plummet.

    Maybe you're right that a future combined DirecTV+DISH would be sufficiently profitable to continue operating with a subscriber base as small as Orby TV is today. But that seems like a big operation chasing very few bucks. (Keep in mind that little Orby just leases space on another company's Mexican TV satellite and that Orby doesn't have full-scale channel carriage contracts -- no locals, nothing owned by Disney, NBCU, or former CBS.) I'm just skeptical that will happen.

    The savior for DBS TV, though, may be commercial establishments like restaurants and bars. Perhaps even by the late '20s there would be enough of those places who prefer using DBS (despite its inherent rain fade). I could imagine a future combined DirecTV+DISH business shutting down residential service and focusing only on commercial establishments with a package of just sports and news channels, along with national feeds of the major broadcast nets (no locals).
     
  16. slice1900

    slice1900 Well-Known Member

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    They'd have to obsolete all standalone receivers (H2x/HR2x) the HDMI output on all Genies HR34/44/54, and all clients other than C61K to go HEVC only. Plus a ton of commercial hardware like COMx000 systems and the TVs they connect to, headends that use standalone receivers that are no longer available. If they are struggling to drop MPEG2 SD, how in the world do you think they could drop MPEG4 HD within the decade? Not to mention that hardly anyone using C band would think Ka band is acceptable substitute, since C band with a 2 meter dish is far less affected by rain than even Ka band would be with even a 20 meter dish.

    And ATSC 3.0 will not have any range increase over ATSC 1.0, unless SFN is used. We may or may not see SFNs, and it will be up to individual stations to determine whether they want to pay to implement them or not.
     
  17. JosephB

    JosephB Icon

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    That's definitely a hole that is only served by MVPDs, and even within that category mostly by satellite today. There will need to be a good solution that can feed 30-40 TVs without requiring 30-40 network streams over the internet. That would definitely be a niche service but as long as there is linear news programming and sports programming, it might be viable. This is also content that would still be viable for planes, government entities, etc. I don't see why it wouldn't be available on an individual basis, even if somewhat expensive though

    Curious why they would need to essentially obsolete every receiver except the C61K? Boxes that can't decode it, fine, but what does the encoding on the satellite have to do with the HDMI output of the box? They don't have to put the content into a 4K stream to put it in HEVC. And, to your point, if they're having trouble dumping SD channels they might as well go whole hog and push as far as they possibly can if it's going to be painful to even just go to MPEG-4

    Separately, if Dish and DirecTV were to merge, there is so much bandwidth wasted across the system that if you could clean slate it and not have to duplicate channels across arcs (Dish) or SD/HD duplicates and could standardize every channel on HEVC, that cleared up bandwidth would still be valuable as a multicast broadcast medium
     
  18. harsh

    harsh Beware the Attack Basset

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    While I think the original comment was directed towards saving bandwidth for AT&T TV rather than DIRECTV, yours is a very important observation about technology adoption in general.

    The AT&T TV Device supports HEVC but I don't think its use is widespread compared to other platforms (especially older smart TVs) that may or may not support h.265.
     
  19. harsh

    harsh Beware the Attack Basset

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    I expect that a merger would go towards DISH's ARC system since it improves the chances of getting service. Whacking all of the SD content could make that happen while allowing improved bandwidth on HD channels. They may (or may not) be able to move the DIRECTV 101W Ku capacity to 61.5W or 72W since the newer satellites were perhaps more slot-flexible.
     
  20. slice1900

    slice1900 Well-Known Member

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    Because the C61K is the ONLY equipment from Directv able to decode HEVC video, none of the HD only equipment like C61 or HR54 (when using its HDMI output rather than serving clients) can handle HEVC whether 4K, HD or SD.
     

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