DirecTV seeks to be online substitute for cable

NEW YORK /AP

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.
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.
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).
We’ll have more details later Monday, but 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.