Earlier this month, AT&T CEO Randall Stephenson hinted that the company’s new streaming service, which is on track to be deployed before the end of the year, would have slim margins and an aggressive pricing structure.
He wasn’t kidding.
The service, DirecTV Now, will have more than 100 channels and cost just $35 a month, less than PlayStation Vue, on par with Sling TV’s Red and Blue combined service and likely more than competitive with any other service that’s on anyone’s mind, and far less than the going rate for a 100-channel bundle from a traditional TV service, which averages better than $100, including AT&T’s own U-verse TV and DirecTV pay-TV services.
“We’re going to be a head-to-head nationwide competitor with the cable ecosystem,” Stephenson said.
Earlier this month Stephenson acknowledged that the new service had a very good chance of cannibalizing the company’s legacy products, saying that the new service was more of what customers wanted. He compared the risk to that it faced when it entered the wireless phone business that essentially has wiped out its residential land line phone business.
“If there was ever an environment that was begging for innovation, it is this environment,” Stephenson said, during his appearance at the WSJ.D conference in Laguna Beach, Calif.
On stage with him was Jeff Bewkes, CEO of Time Warner — parent of HBO, Warner Bros., CNN and Turner, among others — which this week agreed to be acquired by AT&T for $84.5 billion.
Bewkes, meanwhile, gave a tip of the cap to one of his strongest rivals, Netflix.
“We would say and we’ve been saying it since 1995, every channel in the country should look like HBO or Netflix—there’s no reason we can’t,” he said.
Stephenson, looking to assuage concerns from consumers and legislators, used the low-price for DirecTV Now as an example of how the company would hold the line on prices despite the acquisition.
And, he said DirecTV Now’s price would be kept low through new advertising models, especially targeting consumers for more personalized ads.
That price point will make it imperative.