DIRECTV NOW’s Success: Will it come down to marketing?

On November 30, AT&T officially launched its much buzzed-about streaming TV service, DIRECTV NOW. The service is AT&T’s answer to the gradually widening pool of consumers that do not subscribe to pay-TV service, have reduced their TV subscription or have never subscribed to pay-TV. While AT&T is not the first pay-TV provider that has launched a streaming TV service with hopes of scooping up these consumer groups (it joins Sling TV and PlayStation Vue), it could drive higher subscribership than its competitors due to its marketing and bundle efforts.

Learning from AT&T’s Marketing of DIRECTV

One big marketing advantage AT&T has with DIRECTV NOW is its massive customer base of mobility subscribers, many of whom do not subscribe to DIRECTV satellite TV service. For instance, in January, AT&T reported that 21 million of its mobility customers did not subscribe to DIRECTV.

According to Mintel Comperemedia, AT&T’s cross-sell mail increased sharply in Q4 2015, shortly after its acquisition of DIRECTV.
AT&T has already invested its marketing dollars quite heavily to encourage mobility customers to add satellite TV. This is particularly evident in the direct mail channel. According to Mintel Comperemedia, AT&T’s cross-sell mail increased sharply in Q4 2015, shortly after its acquisition of DIRECTV, with AT&T spending an estimated $200 million just on cross-sell direct mail in the first three quarters of 2016.

In email, AT&T has succeeded in driving opens with its limited-time offer subject lines, which often include special offers on DIRECTV just for mobility customers inside. For example, according to Mintel ePerformance/eDataSource, one of AT&T best-performing subject lines of 2016 (with a read rate of 40%) read, “Your new all-included offer ends soon.” Inside, the email featured a DIRECTV package at $50/month for 24 months and an offer for a $200 Visa Reward Card.

AT&T has offered a number of remarkable incentives to its mobility customers adding DIRECTV service, however. For instance, subscribers to both services can get an unlimited data wireless plan that is not available to non-DIRECTV customers and AT&T has been observed to promote over $1,000 in incentives to new customers subscribing to mobility, Internet and DIRECTV service. Perhaps most importantly, AT&T mobility subscribers can stream as much DIRECTV video as they want over the cellular network without impacting their monthly data.

How will we see this approach carried over to DIRECTV NOW? Already, AT&T has announced that subscribers to its prepaid service, Cricket Wireless, can get a free one-month trial of DIRECTV NOW. Additionally, AT&T mobility subscribers are extended the same data-free streaming offer that AT&T has offered its DIRECTV customers. This could be a very compelling reason for AT&T mobility subscribers to add DIRECTV NOW, instead of one of the other streaming TV services, particularly for the growing numbers of US consumers who do not have home Internet.

Many of AT&T’s early efforts to drive awareness of DIRECTV NOW have occurred via AT&T’s social media accounts. According to Mintel’s social media monitoring, the company is taking full advantage of its 7.13 million followers across Twitter, Facebook, Google+, YouTube, Instagram and Pinterest (as of 12/5/2016, 1PM CST) to promote the new streaming service. The AT&T audience will continue to be important as the provider tries to avoid cannibalizing its DIRECTV base and looks to cross-sell the streaming service to subscribers of AT&T mobility, Internet and other non-TV services.

Driving Adoption with Bundles

DIRECTV NOW seems to enter the streaming TV space on a fairly even footing with competing services Sling TV and Vue (if not a little behind), based on its content, pricing and technical merits. If AT&T, however, can truly segment its massive mobility base to target cord cutters and cord nevers (eg Millennials, MDU dwellers, etc.) with DIRECTV NOW promotions, it may have better success in driving adoption than its competitors have had, thanks to the special perks provided when pairing DIRECTV NOW and AT&T mobility.

In addition to cross-selling to its base, brand new acquisitions will be very important for AT&T’s success with this product. Treating mobility service and DIRECTV NOW as a cohesive bundle could help AT&T expand its mobility customer base, while bringing on DIRECTV NOW customers. So far, this pairing of AT&T mobility with the streaming service truly seems to differentiate DIRECTV NOW from its competitors. But if consumers don’t perceive value in this pairing, they will likely choose a carrier like T-Mobile, where they can take advantage of zero-rated streaming of Sling TV or PS Vue (or most other streaming video providers, for that matter) through Binge On.

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications. She provides omni-channel marketing analysis and competitive insights to wireless, TV, internet, over-the-top, and home security service providers across the US and Canada.