AT&T CEO Randall Stephenson said this week at an investor conference there’s strong demand for premium content in a mobile environment, but a new report indicates the carrier is struggling to maintain and grow subscriber figures for its DirecTV Now mobile video service.
Stephenson said AT&T quickly onboarded 200,000 subscribers to DirecTV Now back in December. And according to a Thursday report from Bloomberg, that number continued its upward trend into January, hitting around 328,000 users by the end of that month. But Bloomberg noted things changed drastically in February, when the service reportedly lost 3,000 customers. Subscriber growth stabilized but remained flat in March, Bloomberg indicated.
The report that subscribers started jumping ship from the service in February goes alongside reports of hiccups in DirecTV Now’s launch that left many subscribers with a bad taste in their mouth. In January, reports of outages, errors, app crashes, and log-in issues flooded social media. One user on Twitter likened DirecTV Now to a “dumpster fire” and said the product was “nothing but problems.” Another reported DirecTV Now was “the most frustrating, disappointing TV experience ever.”
It makes sense, then, that frustrated users who may have already paid for the full month of January would quit the service once their paid month was up. At the time, AT&T said it was “continuously updating the app” to improve the customer experience, and Stephenson this week acknowledged AT&T “pulled back” on promotion of the service while those problems were addressed. The fixes and lack of advertising support could account for the stabilization but lack of growth in March.
Stephenson told investors the initial response to DirecTV Now was enough to convince AT&T that owning premium content via the Time Warner merger was better than just distributing it. But the lackluster performance of DirecTV Now in a world where cord cutting is on the rise – a third of cord cutters cancelled service last year alone – is troubling.
Though it’s taken a different approach, Verizon has also attempted to capture a chunk of the mobile video market with little success. Launched in October 2015, go90 has struggled to gain a foothold with users among other higher-profile services like Netflix and YouTube. Though former Verizon CFO Fran Shammo said previously the carrier was “pleased” with go90’s performance, Verizon has yet to release subscriber figures for the service more than a year and a half later.
Go90’s hardships come despite efforts from its creators to offer content specifically crafted for a mobile audience – which sounds a lot like what Stephenson is hoping to do with Time Warner’s content post-merger.
“I’ll cause (CEO Richard) Plepler at HBO to panic when I say this, but can you begin to think about things like Game of Thrones as an example, where in a mobile environment, a 60-minute episode may not be the best experience?” Stephenson asked earlier this week. “Should you think about 20-minute episodes?”
While broadcasting live content like sports games over mobile makes sense, perhaps a better question is whether viewers really want shorter episodes of their favorite TV shows. Or, for that matter, whether they really want to watch TV on their smartphones all that much.
Yes, cord cutting is a trend. Accenture recently found only 23 percent of consumers in 2017 prefer watching TV shows on television sets, down from 52 percent last year. But most of the slack is being taken up by laptop and desktops rather than smartphones. The number of consumers who prefer to watch TV shows on their laptop or desktop jumped from 32 percent last year to 42 percent this year, while the same figure for smartphones crept up only 3 percent from 10 percent last year to 13 percent this year.