It's worth noting that AT&T lost 385,000 of its traditional pay TV customers (DirecTV and U-verse combined) in the third quarter. The silver lining is that the company added 296,000 subscribers to DirecTV Now during the same period.
But the DirecTV-to-DirecTV-Now migration is not a one-for-one exchange for AT&T. Streaming TV customers are coming in at a negative margin -- as in, they're not profitable for AT&T -- given the discounted rates of the service relative to satellite TV fees.
That's kind of a problem.
When it comes to DirecTV Now, AT&T, said Sappington, is likely thinking more about its long-term future than its short-term losses, meaning it's willing to eat profits in the hopes of staying relevant.
"Right now, there are so many new streaming services hitting the market, but if AT&T can come out as a winner in the long-term, that's a victory."
Presumably, then, the company's internet-connected box can give it an edge against Sling TV, YouTube TV and the others.
But let's not forget that many hardware companies have tried and failed to gain a foothold in the streaming media device market. Or, as Sappington put it, building an over-the-top set-top box is a risky maneuver.
About The Writer
Jennifer Van Grove covers e-commerce and digital lifestyle for The San Diego Union Tribune. Readers may send her email at email@example.com.
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