4C - leaderboard - 4-25-18
  • HBO Returns to Workhorse Role in New DirecTV Now Packages

    AT&T is revamping its programming packages for DirecTV Now, and one thing that is clear is that HBO is returning to its traditional workhorse role in driving consumer appeal for a list of ad-supported TV networks.

    According to Cord Cutters News, AT&T will introduce two new packages, DirecTV Now Plus and DirecTV Now Max for $50/month and $70/month respectively. Subscribers to current packages will be grandfathered in, but will see a $10/month rate increase, so the current entry level Live a Little package will move up to $50/month.

    If Cord Cutters News’ list of the TV networks that will be included in the Plus and Max packages is accurate, then how do Plus at $50/month and the current Live a Little at $50/month (for grandfathered subscribers) compare? And what does the comparison say about AT&T’s strategy going forward?

    The new Plus service would still include all 9 of the most-watched networks in 2018, but it would lose HGTV (#10) and Univision (#11). It would also lose 8 of the other top 25 networks: History (#15), Discovery (#18), Investigation Discovery (#19), TLC (#20), A+E (#21), Food Network (#23), Nickelodeon (#24) and AMC (#25). So in total, the new entry level Plus package would lose 10 of the top 25 networks that were included in the current Live a Little package, plus many others.

    But the most noteworthy feature of the Plus (and Max) package is that it includes HBO (as well as HBO Family and HBO Latina). Because HBO has doggedly stuck to its $15/month market skimming price strategy since its launch nearly four years ago (despite all other major SVOD providers offering lower prices), there’s in essence $15/month of HBO value in the new packages.

    Another way to think about it is that AT&T is betting that a $50/month service will be more appealing to consumers WITH HBO but WITHOUT 10 of the top 25 ad-supported TV networks - and perhaps even more important, more profitable for AT&T because it owns HBO and can charge itself a transfer price of anything it wants vs. paying monthly carriage fees to the 10 networks that were bumped off.

    There’s no doubting HBO’s marquee brand, but with the final season of “Game of Thrones” starting soon, and nothing close to its popularity replacing it when it’s over, that’s a whole lot of pressure to put on HBO to pull along the appeal of the new Plus service. Further complexities are that HBO just lost its long-time CEO Richard Plepler and that access to HBO programming is widely-believed to be a part of WarnerMedia’s forthcoming streaming service, which will dilute the appeal of HBO being included in the new DirecTV Now packages.

    AT&T is returning HBO to its traditional workhorse role, but time it’s in an entirely different, far more competitive media landscape. Can HBO drive the success of Plus and Max despite the momentum of other virtual pay-TV services like YouTube TV and Hulu Live TV and other considerations? We’ll see.
     

     

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