AT&T CEO Randall Stephenson on Tuesday said the carrier’s forthcoming DirecTV mobile streaming service will run customers $35 per month for a subscription.
The announcement came during an interview at the WSJ.D conference and served to shed light on the “very aggressive” pricing strategy previously cited by Stephenson.
“It has all the premium content that you know and love, you like to watch, thirty-five dollars a month and that includes your mobile streaming cost,” Stephenson said. “So thirty-five bucks pretty much all in. We think this is big, we think it’s a game changer.”
The price point puts AT&T’s DirecTV Now offering significantly below the average cost for cable pay-TV service, which a recent Leichtman Research Group report found was around $103 per month, and more on par with Dish’s Sling TV. Sling, which allows users to stream live TV channels over the Internet on their TV, computer or mobile device, offers a base package of 19 channels for $20 per month with add-on packs for sports, kids, lifestyle and more available for $5 each.
MoffettNathanson in a Wednesday research note called the price point a “dramatic departure” from expectations of a “fat” over-the-top bundle. Given the estimated costs for channels expected to be included in the offering, the firm also noted the estimated margin for AT&T could be as low as $1 before the inclusion of customer service, transport, computing and storage costs.
Stephenson has previously said the DirecTV Now streaming service will offer more than 100 channels. Data used for streaming on the app will be zero-rated for AT&T customers, Stephenson said, meaning their total cost will stay at the $35 mark. Users on other carriers will likely need to evaluate their data consumption to see if they need to jump to a new, higher-cost tier to use the app freely and avoid data overages.
On Tuesday, Stephenson said the $35 price point will be supported with new ad models that will help offset increasing content costs.
Stephenson said AT&T has been developing the mobile video offering for more than a year, but was unable to get media companies to participate until it achieved scale with its DirecTV acquisition. The carrier’s recently announced merger with Time Warner will help it continue to introduce new offers in the marketplace, he said.
“If you want to innovate, you have to have scale, you’re going to have to have content that will allow you to innovate,” Stephenson said. “Time Warner is going to become the launching pad for innovation. Time Warner is where we’re going to try to touch these third rails that the industry will not and has not touched.”
The DirecTV Now streaming service is expected to be launched next month.