I hate to write articles like this, but it’s only fair. AT&T yesterday announced their subscriber numbers, and their losses are impossible to ignore. 156,000 satellite TV customers left the service along with 195,000 customers of the service formerly known as U-Verse TV. While the company’s DIRECTV NOW service picked up 152,000 customers, that’s obviously not enough to balance out the losses in the higher-priced services.
Sadly, this is the new normal. There is definitely a market for premium services like those provided by DIRECTV, but that market isn’t for everyone. Faced with higher prices driven by content provider greed, cable TV bills more than quadrupled in the last 20 years while customer service levels dropped to abominable levels. It was this dissatisfaction in cable companies that drove DIRECTV’s growth in the early 21st century, but even the satellite giant wasn’t immune to out-of-control programming costs, especially in sports programming. The result was the “yearly price increase tango” which slowed 2nd quarter growth, and has now given DIRECTV satellite one of its rare down quarters. Unfortunately, AT&T as a whole seems to have a down quarter – losses in its flagging U-verse service were not offset by growth in other television properties, and the company also lost about 89,000 cellular customers in its traditional “postpaid” service.
Internet commenters are quick to point fingers at AT&T for what they see as slow upgrades to their internet infrastructure, but to be honest that doesn’t ring true. First of all AT&T is upgrading its infrastructure as quickly as anyone, and the people who say they’re not are usually just the people who aren’t getting personally upgraded as quickly as they would like. Also, it’s hard to really tie this to a drop in TV subscribers. Sure, there are people who are going to bundled products from a different internet provider, but those heavily-discounted “teaser” rates have been around long enough that you should see people leaving the competition as quickly as people go to it.
Sadly, I think that the drop in subscribers in the pay-TV world in general is due to the fact that there is some very good programming out there and it’s only available on streaming. No matter how reliable your TV service is, no matter how tricked-out the DVR, and no matter how much free equipment your provider throws at you… the simple fact is that the buzz-worthy shows are either exclusive to streaming or you can get them using streaming.
I blame content providers who raise their own prices every year while delivering less interesting stuff. Most local TV stations manage to double their prices every three years and yet broadcast TV has seen an overall 90% drop in ratings since 1980. Faced with staggeringly high content costs, pay TV companies raise prices. And in the meantime streaming competitors who don’t pay for distribution come in at a lower price.
If history is any indication, the third quarter of the year will be strong for DIRECTV satellite, due to the NFL Sunday Ticket package they exclusively offer. That doesn’t help the pay-TV industry as a whole but it should make AT&T’s bottom line look a little better.