AT&T’s online service may see growth sputter

NEW YORK: AT&T Inc’s live online video service, DirecTV Now, has seen its growth stall in recent months, according to people familiar with the matter, raising questions about consumer demand for the growing number of new web-TV services entering the market.

By the end of January, two months after its debut, the cable-like TV service had surged to about 328,000 subscribers, according to people familiar with the matter. Yet DirecTV Now lost 3,000 customers in February, and its subscriber growth was roughly flat in March, the people said.

AT&T declined to comment. The company introduced DirecTV Now on Nov 30, offering more than 100 channels including ESPN, Fox, Bravo and Nick Jr, for US$35 a month for a limited time. To sweeten the deal for AT&T wireless customers, DirecTV Now streaming doesn’t count against their data plans.

The introduction was marred by some technical glitches, and AT&T has said it pulled back on marketing to iron out the kinks. That may have contributed to the slowdown in sign-ups.

Still, DirecTV Now’s tepid growth is a sign of concern for a pay-TV industry that’s counting on streaming services to attract subscribers who have fled to cheaper entertainment options like Netflix or Amazon. It’s become a crowded market, with competing products now offered by AT&T, Dish Network Corp, Sony Corp, Hulu LLC and Google’s YouTube.

So far, the new online TV packages haven’t captured all the people dropping pay-TV service. While 477,000 signed up for online TV services including Sling TV, DirecTV Now and Sony PlayStation Vue in the first quarter of this year, traditional pay-TV providers lost 732,000 customers as cord-cutting accelerated, according to an estimate by MoffettNathanson.

Pay-TV providers like AT&T are trying to strike a delicate balance with their online TV ventures. If they attract too much interest in these new services, it could come at the expense of their traditional pay-TV business. Instead of adding new subscribers, they risk simply having customers trade down to cheaper packages.