DirecTV Now was once on a trajectory to becoming America’s largest over-the-top streaming service. Now subscribers are jumping ship in reaction to higher prices and slimmer channel lineups. Why would executives at parent company AT&T torpedo the one part of its video business that was actually growing? The answer is a strategy that positions DirecTV Now, not as a competitor to YouTube TV, but as a replacement for AT&T’s dying pay-TV businesses.

2016-2018 Launch and Aggressive Growth

AT&T entered the live TV streaming business in late 2016 when it launched DirecTV Now. This was nearly two years after rival satellite TV company Dish Networks launched Sling TV. AT&T used the time to design a competitive offering despite being late to the market.

Unlike Sling TV, DirecTV Now had an easily understood menu of programming packages. They started at an affordable $35 per month for more than 60 channels and became progressively more expensive as the number of channels increased. But even the most expensive plan only cost $70 per month — a fraction of cable or satellite TV subscriptions.

From the beginning, growth was a priority for DirecTV Now. The company offered a steep discount that brought its 100-channel package down to $35 per month. Subscribers to AT&T’s wireless services could get DirecTV Now for as little as $10 per month. More often than not, AT&T sweetened the deal even further by offering new DirecTV Now subscribers a free streaming device like the Apple TV.

Subscriber growth at DirecTV Now
Promotions drove the growth of AT&T’s DirecTV Now.

The promotions brought people in their thousands. In its first month alone, DirecTV Now signed up more than 267,000 new subscribers and reached 1 million subscribers in less than a year. By the middle of 2018, DirecTV Now had more than 1.8 million subscribers, putting it in a strong second place behind Sling TV’s 2.3 million subscribers.

2018-2019 Slamming the Brakes

Mid-2018 was the end of DirecTV Now’s growth. AT&T raised subscription prices in July and then began scaling back its promotions. By November, AT&T was warning investors that the focus on profits would “likely result in negative net adds”. And then, in early 2019, the big change happened. DirecTV Now completely restructured its programming packages:

Number of Channels

March 2019 April 2019


















Not only did the prices change, but DirecTV Now changed its channel lineups as well. Existing customers who want to keep popular content like Travel Channel or The Weather Channel must “upgrade” to plans that cost $110 or more.

DirecTV Now simply is not competitive anymore. PlayStation Vue’s entire 100-channel lineup costs only $60 per month, YouTube TV’s 70-channel lineup is available for $50 per month and Hulu with Live TV offers 60 channels for $45 per month.

Subscriber losses at DirecTV Now
Without promotions, DirecTV Now’s growth went into reverse. Higher prices will make it worse.

The impact was predictable. Once AT&T Wireless customers lost their $10 monthly rate, 350,000 of them canceled by the end of AT&T’s 2019 first quarter. But it won’t stop there. On the AT&T’s Q1 earnings call, CEO Randall Stephenson warned that subscriber losses will worsen as customers’ monthly bills go up.

Clues to the Mystery

Has AT&T shot itself in the foot by making DirecTV Now unaffordable? Possibly, but there is a method to their madness which we can piece together from other aspects of AT&T’s streaming business.


First up is WarnerMedia which AT&T brought in through its acquisition of Time Warner, and its three businesses. The Warner Bros. production studio is the home to DC Comics, New Line Cinema and the Cartoon Network. WarnerMedia Entertainment runs HBO, Cinemax, TNT and other cable channels. And WarnerMedia News & Sports which operates CNN, Bleacher Report and several regional sports networks.

In early 2019, AT&T told investors that it would launch an on-demand streaming service anchored on content from HBO and other WarnerMedia properties. Intended to compete with Netflix and the yet-to-launch Disney+, this new service will offer various paid tiers as well as discounted options for AT&T Wireless subscribers.

AT&T WatchTV

In mid-2018, AT&T launched a live TV streaming service separate from DirecTV Now under its own brand. AT&T WatchTV is a “skinny bundle” that offers more than 30 channels for only $15 per month. The new service skips expensive channels like ESPN and the broadcast networks in favor of lifestyle and entertainment channels like HGTV and AMC.

Tellingly, AT&T gives the service away to subscribers of its Unlimited wireless plans. It isn’t clear what kind of reception WatchTV has gotten. By the end of the 2019 first quarter, AT&T would only say that WatchTV had 500,000 “established accounts” eligible to use the service.

Project Osprey

Beginning in 2017, news organizations were hearing about a new streaming device under development at AT&T. Codenamed Osprey, the streaming device will use a custom version of Google’s Android TV operating system and support 4K video streams over a customer’s broadband internet connection. Enough information had leaked by late 2018, that AT&T executives had to discuss it with investors. AT&T CFO John Stephens explained that the “self-installed, full-linear” device would replace satellite-based TV with internet-based streaming.

The Pay TV Migration

Putting these pieces together, the recent changes at DirecTV Now become much clearer. Services like WatchTV will be the way AT&T competes with the likes of YouTube TV. The new WarnerMedia on-demand streaming service will be the way AT&T competes with Amazon and Netflix.

DirecTV Now has a different purpose. AT&T executives have already admitted that they won’t buy any more DirecTV satellites. Instead, they will move their satellite customers to the Osprey streaming device and the customers’ own broadband connections. Right now, those are cable or fiber optic connections. But a handful of AT&T customers in Austin are already streaming DirecTV Now over 5G wireless connections.

Related: Cable’s Hopeless Fight to Stem Subscriber Losses

Compared to DirecTV’s pricing for satellite service, the new DirecTV Now pricing looks very affordable. That won’t make a difference to cord cutters who will continue to flee the service. But expect to see DirecTV Now’s subscriber losses stabilize later this year as more satellite customers switch over.

Chris Casper is a former tech industry product manager who escaped from California for New Mexico. Now he writes about science and tech while searching for the perfect green chile sauce.