DirecTV wants to be the next on­line sub­sti­tute for ca­ble

Daily Local News (West Chester, PA) - - MARKETPLACE - By Tali Ar­bel AP Tech­nol­ogy Writer

NEW YORK >> There are al­ready a few on­line ser­vices that aim to re­place ca­ble, but they haven’t at­tracted many users yet. AT&T’s DirecTV hopes to change that.

While just about any per­son you meet on the street will tell you ca­ble costs too much, the vast ma­jor­ity of Amer­i­cans don’t think it’s bad enough to cancel. Cheaper on­line live-TV ser­vices, like Dish Net­work’s Sling TV and Sony’s PlayS­ta­tion Vue, re­main rel­a­tively un­known com­pared with Net­flix, Hulu and Ama­zon. And while they’re easy to or­der and cancel on­line and fairly sim­ple to use, they still have draw­backs.

“No one has re­ally de­liv­ered the right com­bi­na­tion of con­tent, price and ease that will get peo­ple to make that call to their cur­rent provider and say say­onara,” said For­rester an­a­lyst Jim Nail.

It’s un­clear if AT&T’s new ser­vice, cre­atively dubbed DirecTV Now, will break out with con­sumers. But it has the size to get bet­ter deals from en­ter­tain­ment com­pa­nies, who have slowly come around to the idea of stream­ing. And if that doesn’t work, watch for a live-TV op­er­a­tion from Hulu early next year. And maybe one from Google. Or, who knows, maybe even Apple, too.

Who wants to watch?

If an on­line ca­ble ser­vice could fig­ure out how to get cus­tomers to pay up, it could at­tract mil­lions of peo­ple.

Amer­i­cans are in­creas­ingly dis­sat­is­fied with how much they pay for what’s on TV. The num­ber of cus­tomers pay­ing ca­ble and satel­lite op­er­a­tors for TV has dropped nearly 3 mil­lion, to roughly 97 mil­lion, in the past two years, ac­cord­ing to in­dus­try ex­perts Mof­fet­tNathanson Re­search.

And plenty of peo­ple never signed up for a $100 TV bun­dle to be­gin with. Re­search firm SNL Ka­gan es­ti­mates that about 14.4 mil­lion house­holds pay for in­ter­net but not TV. AT&T sees the po­ten­tial mar­ket for DirecTV Now as 20 mil­lion homes.

But an­a­lysts es­ti­mate that Sling has racked up fewer than 1 mil­lion sub­scribers since it launched in Fe­bru­ary 2015. Vue’s num­bers are harder to get a han­dle on, but it’s not on the list of top 10 most pop­u­lar on­line video ser­vices com­piled by re­search firm Parks As­so­ciates. Nei­ther ser­vice re­ports sub­scriber num­bers.

Of course, it’s hard to at­tract at­ten­tion when there are also dozens of other video apps. You can sign up for spe­cific sports, or com­edy, or anime, or a sin­gle chan­nel, like HBO or CBS. Net­flix, the coun­try’s most pop­u­lar paid video ser­vice, has 47.5 mil­lion cus­tomers in the U.S.

The prob­lems with in­ter­net TV

New ser­vices don’t have all the chan­nels peo­ple want. There’s been no perfect so­lu­tion that lets you pick only your fa­vorite chan­nels for a rea­son­able price, a vi­sion of TV nir­vana known as “a la carte” that has failed to ma­te­ri­al­ize be­cause it un­der­mines the busi­ness mod­els of en­ter­tain­ment con­glom­er­ates. Only peo­ple in some mar­kets can watch broad­cast chan­nels like NBC and Fox in real time. That’s OK if you can wait to watch the next episode of a TV se­ries, but sports fans typ­i­cally want to watch games live.

And even though so­called cord-cut­ters are on a quest for cheaper video, vir­tual ca­ble may end cost­ing just as much, de­pend­ing on how many sports chan­nels or other ex­tras you want and how much your in­ter­net costs when it’s dis­con­nected from its ca­ble-bun­dle dis­count. Bun­dles from Sling and Vue range from $20 to $65 a month. You can pay to add more chan­nels.

These ser­vices are easy to sign up for and cancel — but con­nect­ing them to a TV of­ten re­quires an ex­tra step or a new gad­get, like an Apple TV. On the plus side, while they’ve ex­pe­ri­enced some tech­ni­cal is­sues dur­ing ma­jor events, ser­vice qual­ity ap­pears to have im­proved.

And they sometimes lack some of the best fea­tures of both tra­di­tional TV (end­less chan­nel op­tions, DVR record­ing) and subscription TV ser­vices like Ama­zon and Net­flix (no black­outs, no re­stric­tions based on lo­ca­tion if you’re in your home coun­try).

En­ter DirecTV

It ap­pears that DirecTV Now will have some of those same prob­lems. It still hasn’t an­nounced a deal with CBS, which airs hits like “NCIS,” ‘’The Big Bang Theory” and NFL foot­ball games and which has its own stream­ing ser­vice it wants you to pay for.

But hav­ing the mus­cle of AT&T and DirecTV, to­gether the coun­try’s largest video provider, be­hind DirecTV Now may help it shake out more at­trac­tive pack­ages from en­ter­tain­ment con­glom­er­ates. AT&T CEO Ran­dall Stephenson said in Oc­to­ber that the $35-a-month ser­vice will of­fer more than a hun­dred “pre­mium” chan­nels.

That se­lec­tion would be strik­ing com­pared to the smaller of­fer­ings from com­peti­tors, said Mac­quarie an­a­lyst Amy Yong. AT&T will pro­mote it by let­ting its cell­phone cus­tomers watch with­out us­ing up their mo­bile data. But it may not be good for large fam­i­lies — AT&T has said you can only run it on one or two screens at a time.

And con­sumers could save sub­stan­tial amounts of money thanks to the in­flux of new ser­vices. Take Dana Lee, a 32-year-old Yan­kees fa­natic from Con­necti­cut. (“I would stand on a roof with tin­foil on my head to get the Yan­kees,” she says.) She down­graded her $245-amonth Com­cast bun­dle to $90 in­ter­net-only ser­vice ear­lier this year be­cause it no longer car­ried the Yan­kees chan­nel.

Since then she’s gone from Vue to Sling and now back to Vue again, fol­low­ing the ad­di­tion of net­works she likes — and is on the look­out for more. She still misses PBS and get­ting live feeds from the four ma­jor broad­cast­ers.

“I’ll be bounc­ing back and forth be­tween them with who­ever gives me the most for that $30-$40 range,” she wrote in an email.

THE AS­SO­CI­ATED PRESS

Traders gather at the post that han­dles AT&T on the floor of the New York Stock Ex­change. There are al­ready a few on­line ser­vices that aim to re­place ca­ble, but they don’t have many users yet. AT&T’s DirecTV hopes to change that.

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