AT&T Displays Dramatic Growth of DirecTV Now

After a few months off from promos and hard-charging marketing, AT&T says it has righted the ship when it comes to subscription adds for its live, streaming TV service.  The company reported with second quarter earnings that it has 491,000 DirecTV Now subscribers.

It added about 200,000 subscribers during the fourth quarter last year after the streaming service debuted in November. But with technical difficulties causing subscriber setbacks, AT&T opted not to include the numbers with first quarter results this year.

During Tuesday’s earnings call, CFO John Stephens said the half-a-million subscribers represented “pretty dramatic growth, particularly when we gave it a couple-three months rest there while we tested the platform.”

Stephens added that the product would offer increasing returns as “the data insights that we’ll be able to get and the ability to add advertising and other sources of revenue” come to fruition.

Addressable advertising – wherein advertisers are able to target ads down to the household level – offers considerably higher margins, as high as three or four times that of AT&T’s national ad sales, Stephens said.

Effective addressable advertising requires the type of information AT&T hopes to gain by studying its DirecTV Now customers.

That could be one reason the company is pushing to move customers toward the service. Entertainment Group CEO John Stankey said during its launch that “it’s really important to understand that this is the foundation for how we’re going to do things in the future.”

Still, DirecTV Now subscribers so far represent a tiny portion of the company’s TV distribution business, which includes 25.2 million video connections. About 83 percent of its subscribers are on its satellite, DirecTV platform.

However, the company continues to bleed traditional users, losing about 200,000 subscribers total this quarter even with DirecTV Now bringing on new customers. Stephens said that about half of the DirecTV Now subscribers are coming from traditional pay subscribers — “mainly our competitors,” he said — while the other half were not previously paying for any live TV platform.

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Scott Hart

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