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The Name Isn't the Problem With AT&T's Skinny Bundle

By Stephen Lovely - Aug 20, 2019 at 8:53PM

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AT&T is rebranding struggling live TV service DIRECTV NOW, but that won't fix the service's core problems.

What's in a name? A lot, hopes AT&T (T -0.68%). The telecom giant is overhauling the branding of its DIRECTV NOW live TV streaming service to AT&T TV NOW. It's a new coat of paint on a service that, not so long ago, looked like the healthiest of the skinny bundle gang. 

A&T's 2015 purchase of DIRECTV set the company up for greater forays into live TV, including live TV streaming (AT&T also has its own legacy pay TV business). DIRECTV's fellow satellite TV company, Dish (NASDAQ: DISH), was then pioneering the multichannel streaming service with its Sling TV brand, which was still on top when DIRECTV NOW entered the space in late 2016. All seemed well for DIRECTV NOW at first, but problems soon arrived -- and they go much deeper than the branding.

Coins fall through the hands of someone wearing a business suit.

Image source: Getty Images.

A hot start and a fast crash

AT&T pushed DIRECTV NOW out of the gate with promotional pricing, and followed up in 2017 with a renewed marketing push. The company's efforts seemed to work as the service's subscriber count surged. At its peak in October 2018, DIRECTV NOW had 1.85 million subscribers. That was second only to Sling TV's then-2.47 million subscribers. Earlier in 2018, DIRECTV NOW's growth and momentum had led some observers to expect it to pass Sling TV by the year's end.

But DIRECTV NOW's high-water mark came in a quarter that also showed slowing momentum. The 2017 marketing push was over and when AT&T took its foot off the gas and cut marketing efforts, subscription growth cratered. In fact, DIRECTV NOW actually lost subscribers in Q4 of 2018. AT&T said that lapsing promotional subscription rates and reduced promotional activity were both factors. In Q1 of 2019, DIRECTV NOW again lost subscribers. It was more of the same in Q2 of 2019.

Bad news on top of bad news

At the same time, the price has risen.

DIRECTV NOW hiked prices in March, pushing the cost up $10 per month across all four of its subscription options. Customers who landed a promotional rate back in DIRECTV NOW's salad days paid $35 a month for the cheapest option; now the cheapest option is $50 per month.

To be fair, the multichannel streaming space is not a very forgiving one. Profits are nonexistent, and some competitors -- most notably Sony's (NYSE: SNE) PlayStation Vue -- have been rumored to be on their last legs for some time now.

But even if the whole skinny bundle idea doesn't make sense, the newly rebranded AT&T TV NOW still looks rough relative to the competition. Dish's Sling TV remains the service to beat in subscriber count. Disney's (NYSE: DIS) Hulu with Live TV has reportedly overtaken AT&T's service in the subscriber race with a total that is approaching 2 million. Meanwhile, Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) YouTube TV has surged past 1 million and appears to have some of the momentum that AT&T TV NOW so sorely lacks.

In short, the service now known as AT&T TV NOW has serious problems even relative to its competitors in a brutal business space. This goes much deeper than a brand name.

Brand to brand

On top of all of this, AT&T's new name for its streaming service is a somewhat confusing one, given that AT&T also has products branded as AT&T WatchTV and AT&T TV, among other similar names. It's clear that AT&T is sick of seeing the DIRECTV brand on its offerings, but it's far from clear that shedding that brand will help the newly christened AT&T TV NOW reach more subscribers or fit better into AT&T's jumbled streaming strategy.

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