Traditional TV's plan to fight Netflix and save the channel bundle is failing (T, DISH)

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  • AT&T’s DirecTV Now lost 83,000 net subscribers during the
    first quarter of 2019. Dish Network’s Sling TV gained just
  • Overall, BTIG Research analyst Rich Greenfield said it was one
    of the worst quarters ever for pay-TV subscriber losses in the
  • Price hikes, package changes, and more competition lead to the
    weak quarter, the companies said.
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    Insider’s homepage for more stories.

Legacy pay-TV’s big bet on internet bundles is losing

AT&T and Dish Network’s online pay-TV services each posted
poor subscriber growth during the first quarter of 2019.

DirecTV Now, AT&T’s streaming-TV service, lost 83,000 net
subscribers during the period, AT&T said when it
reported earnings
on April 26 — after losing 267,000 during
the fourth quarter of 2018, and gaining 312,000 during the first
quarter of that year. It closed the period with about 1.5 million
subscribers, flat versus a year ago. (AT&T did not report
subscriber figures for its low-cost bundle, Watch TV, which costs
$15 per month compared to the $50 DirecTV Now starts at.)

The quarter was a little rosier for Dish’s Sling TV, but not by

Sling TV ended the period with 2.4 million subscribers, about
121,000 more than it had this time a year ago, it said in its
quarterly report
on May 3. It gained just 7,000 net subscribers, down from 91,000
during the same quarter in 2018.

The quarter was one of the worst ever for cord-cutting in the
US, Rich Greenfield, a media analyst at BTIG Research, who has been
bearish on pay-TV bundles,
wrote in a blog post
on Friday.

Traditional pay-TV companies like DirecTV and Dish bet on
streaming-TV bundles to offset the subscribers they were losing in
their satellite and other pay-TV businesses. But now, Greenfield
found, the virtual bundles are failing to cover the losses.

Read more:
The digital skinny-TV bundles that promised a cheap alternative to
cable are getting more expensive. The CEO behind a $20 package
explains why.

In the first quarter of 2019, overall net losses among US pay-TV
services, including the internet bundles, totaled 1.02 million,
compared to a net gain of 245,000 this time last year. The
virtual-TV services added just 174,000 subscribers compared to
933,000 in the first quarter of 2018.

Greenfield tracked most of the major traditional pay-TV services
in the US, including Charter, Comcast, DirecTV, Dish, Verizon, and
others, as well as the streaming-TV services DirecTV Now, FuboTV,
Hulu Plus Live TV, Philo, Sling TV, Sony’s PlayStation Vue, and
YouTube TV.

The weak quarter comes as many internet bundles have raised
prices to keep up with rising costs of programming. 

DirecTV Now, Hulu Plus Live TV, and FuboTV raised prices in
recent months. Philo, one of the lowest-cost bundles,
scrapped its $16 bundle in May
and is now only offering its $20
package. And, last summer, PlayStation Vue and Sling TV
hiked the costs of some plans

At DirecTV Now, the subscriber losses were linked to an overhaul
that was
announced in March
of its bundles and channel lineups, which
increased the cost of its packages by $10 per month. It was the
service’s second price hike in under a year. AT&T expects a
“decent” second half of the year for DirecTV Now, CEO Randall
Stephenson said on its first quarter earnings call.

Dish blamed Sling TV’s sluggish growth on greater competition,
including that from other streaming-TV services, and spats with
AT&T and Univision that saw
channels like HBO removed from the service
in November.

Traditional pay-TV companies had looked to internet bundles as a
way to stave off competition from streaming services like Netflix,
by offering the flexibility to watch video anywhere without
contracts and typically at lower price points than cable. For
legacy networks like Disney and Comcast’s NBCUniversal, these
bundles also helped preserve the carriage fees they received from
pay-TV providers who distributed their channels. 

As the online pay-TV bundles from traditional TV companies like
AT&T and Dish waver, however, legacy media brand Viacom has
gone another route.

The company bought for
$340 million earlier this year
a free streaming-TV service
called Pluto TV, which earns its revenue from advertising, rather
than a combination of advertising and subscription fees. Viacom has
launched 14 free channels
for BET, Comedy Central, MTV, and
other brands on Pluto TV. Viacom reports earnings on May 10.

revenues have begun to fall for the first time after years of
subscriber losses, and it’s only going to get

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Traditional TV's plan to fight Netflix and save the channel bundle is failing (T, DISH)