Pretty much everyone, me included, assumed that the new “DIRECTV Now” service launching later this year would be a low-priced, thin package like Sling TV. (Yeah, I get the irony that it’s not available now.) Apparently that’s not going to be true. AT&T’s John Stankey spoke yesterday at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. I wasn’t there, but the fine folks at Multichannel News were. They quoted him as saying,
It is a rich bundle of content; it’s not a skinny bundle of content…We think skinny bundles have a very small application in the market over time.
Well I feel sheepish.
So, based on these remarks, it seems like DIRECTV Now is going to be a higher-priced bundle, possibly including all of the channels currently authorized for out-of-home streaming on DIRECTV’s app. And it’s fair to presume it will carry a higher price tag than Sling TV as well. This changes the market strategy somewhat, making it less appealing to very young adults and more appealing to 25-35 year old apartment dwellers who want the DIRECTV experience but can’t get it for whatever reason.
It’s hard to know if this is an underserved market waiting to explode or a sliver of the pie that’s too small to worry about. Mr. Stankey has surrounded himself with experts and my guess is he knows what he’s doing.
If this concept is successful, DIRECTV gets a real win here. They get access to a new customer base without the cost of installing dishes and providing free hardware, and if they partner with streaming giants like Google, Apple, Amazon and others, that may be all the hardware needed. It could be a really big win for them here. In the meantime they’re not stuck pursuing the very low end of the market where it’s very hard to make money and where people are more likely to just pull pirated programming off the internet or use mom’s streaming account passwords.
At the same time, by pricing DIRECTV Now properly, they create some real choice in the marketplace. If you are willing to spend $60 a month (a fake number, they haven’t announced the real price yet) you could get a streaming service month-to-month with over 100 channels, or you could enter into a two-year contract for 400 channels. It becomes your choice at that point. This could also help DIRECTV get out of the super-low-price segment where you have to offer heavily discounted service for the first two years to get a customer in the door. DIRECTV’s streaming packages could take over for their low-priced satellite packages and still give customers and easy transition from streaming to satellite if they wanted to go that way.
Tip of the hat to you, Mr. Stankey. You’ve redefined the conversation. I can’t wait to see the product.