DirecTV Now to Cost $35 Per Month

OTT-TV service to feature 100-plus ‘premium’ networks, factor in mobile streaming costs, AT&T CEO says
Stephenson - wsj.jpg

DirecTV Now, AT&T’s emerging OTT-TV service, will cost $35 per month and offer 100-plus “premium” channels, AT&T president and CEO Randall Stephenson said Tuesday at The Wall Street Journal DLive conference.

DirecTV Now Coming in November

That price will also include the customer’s mobile streaming cost, he said.

“We think this is big,” Stephenson said, while also joining the chorus at AT&T that the service will be a “game-changer” whose intent is to to bring a “new, different competitor [to] the cable ecosystem.”

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Stephenson also shed a little more detail on the launch date, noting that DirecTV Now will debut by the end of November.

The plan is to target the 20 million homes or so that have left the “premium content ecosystem” he said.

Programming costs aside (DirecTV’s lineup hasn’t been announced), Stephenson said DirecTV Now will be able to get to that price point with an app-based approach that doesn’t require a satellite dish, expensive truck rolls and set-tops that cost hundreds of dollars. 

Regarding programming, Stephenson acknowledged that content costs are not going to be flat, so the plan, which factors in the proposed merger of Time Warner, is to "develop new ad models" that enable the company to keep price points in check and offset inevitable content price increases. 

“We all need more competition in advertising,” said Warner CEO Jeff Bewkes, who joined Stephenson on stage, citing a “duopoly” that has emerged on the digital side with Facebood and Google. "There's one thing they love, and that's innovation and competition. And we are here to help,” Bewkes quipped. 

Calling Time Warner a “launching pad for innovation,” Stephenson also said the combined company will also look to test "third rails that the industry will not and has not touched,” and that will include how to bring a la carte pricing into the system. 

"We are going to be a head-to-head, nationwide competitor with the cable ecosystem...and 5G deployment is a game-changer," he said, noting later that he expects 5G deployments to get rolling by 2018 and scale up in 2019 and 2020. "The intent is to bring Time Warner and AT&T together and create a very new, and very different kind of competitor nationwide...This is how we're framing this."

“When 5G is up and deployed, it becomes a nationwide platform of video delivery. Period,” Stephenson added. “This is a 1-Gig network capability that is wireless and mobile.” 

The execs were also asked if the regulatory risk tied to the proposed AT&T-Time Warner merger was the deal’s hardest call, pointing to the failed AT&T-T-Mobile deal.

Stephenson said AT&T knew going into the T-Mobile del that it was with high risk, but said that deal, which was a horizontal merger, does not compare to the vertical merger being proposed by AT&T and Time Warner. 

Stephenson said he wasn’t surprised that presidential candidate Donald Trump and others have come out against the proposed merger, calling them “uninformed comments.”

RELATED: Trump Would Block AT&T-TW Merger

“Anyone who characterizes this as a means to raise prices is ignoring the basic premise of what we're trying to do here -- again, a $35 product we bring in to the market to innovate on and find new ways of bringing content to customers." 

The vertical nature of the proposed deal also means there won’t be any changes to the current market structure for broadband and wireless, he said, adding that he thinks the chances the market are giving the deal are “too pessimistic.”

“I feel pretty good about this deal,” Stephenson said.