AT&T thinks it can charge more for fewer streaming-TV channels because of HBO.
The telecom company raised prices for its DirecTV Now streaming-TV package of live and on-demand channels by $10 while also slashing the channel lineup this week, but threw in access to premium-TV giant HBO, a subsidiary of AT&T, as a consolation prize. Just in time for the final season of Game of Thrones.
The cheapest DirecTV Now plan, called “Plus,” now costs $50 per month for more than 40 channels and HBO, AT&T announced yesterday. Packages used to start at $40 for more than 65 channels without HBO, and go up to than 125 channels for $75 per month. DirecTV Now also introduced a “Max” plan this week that costs $70 per month, and offers more than 50 channels plus HBO and Cinemax. The new rates basically cover the added cost of HBO, which charges $15 per month through its own standalone service.
Dropped from the TV service are cable-TV mainstays like Discovery’s HGTV, AMC Networks’ AMC, and Viacom’s MTV. Networks from other operators including Disney, Fox, and NBCUniversal remain. AT&T confirmed to Quartz that existing DirecTV Now customers could keep their current packages for an additional $10 per month.
The plan changes come as DirecTV Now has been losing subscribers amid a broader shift away from the deep discounts that it and its rivals peddled, which AT&T had said were unsustainable. The service lost 267,000 subscribers last quarter as it put profitability before subscriber growth.
“Within DirecTV Now, it’s a tale of two cities,” said John Donovan, CEO of AT&T Communications, last October. “It’s folks that are just jumping from promotion to promotion and really spinning in the industry between us, Hulu Live, YouTube TV… What we’re after is customers that are highly engaged, that find the product compelling, and use it a lot.”
DirecTV Now currently has the highest starting price of the internet’s live-TV subscriptions, including Hulu + Live TV, YouTube TV, PlayStation Vue, Sling TV, and Philo.
This is DirecTV Now’s second price hike (paywall) in the past year. AT&T said during antitrust proceedings related to its acquisition of Time Warner that buying the company could allow it to lower prices (paywall) for TV customers. The US Justice Department argued against the acquisition in part (paywall) because of concerns that it would indirectly raise TV prices, but lost an appeal (paywall) to block the merger last month. We can’t say we weren’t warned.