AT&T is off to a running start with its streaming live TV service DirecTV Now. According to an SEC filing, AT&T brought on more than 200,000 subscribers during the service’s first month on the market. That’s double the number of subscribers competitor Sling TV brought on in its first month. Right now, the question is: can AT&T keep that momentum going?
AT&T made a massive marketing push for DirecTV Now in December 2016, following its November 30 launch. According to Pathmatics, in December AT&T spent an estimated $3.7 million promoting DirecTV Now online, mostly on YouTube. This marketing effort coincided with limited-time offers, such as DirecTV Now’s lead offer of the 100+ channel “Go Big” package for $35/month.
In January, however, AT&T’s online ad spending to promote DirecTV Now decreased nearly 90%. Additionally, its limited-time pricing promotion on the “Go Big” package concluded on January 9. With a reduced online marketing presence, and the end of its introductory offers, AT&T could be facing a drop off in DirecTV Now interest, and slowed subscriber growth.
What does the data tell us?
When examining several data sources, it seems to indicate slowing interest and subscribers. Traffic data from SimilarWeb* illustrates how Directvnow.com site visits decreased sharply after the seven-day trial period for users that grabbed the $35/month special offer on the last day of availability. Traffic spiked that date, January 15, and remained high until January 18, but has been noticeably lower since then, averaging 181K visitors per day.
It’s natural to expect higher site traffic immediately after a new product launch, thanks to marketing, media coverage, resulting buzz, and initial curiosity. Plus, although Directvnow.com experienced high traffic volumes, SimilarWeb’s traffic data reveals that the site’s bounce rate was around 50%, and visits to the “Create Account” page accounted for less than 10% of page visits to the entire site.
To get a sense of whether AT&T has sustained subscriber growth, we can take a look at the estimated email volumes for DirecTV Now welcome emails, provided by Mintel ePerformance/eDataSource**. We estimate that AT&T sent over 300,000 Welcome emails in December, and nearly 350,000 in January. The provider sent 35% fewer in February, with just over 220,000 observed. This would suggest that subscriber growth is, in fact, slowing.
Of course, even among the pool of 650,000 welcome email recipients, there’s no guarantee that those recipients stuck around after their free trial, particularly considering the technical issues that have plagued DirecTV Now. SimilarWeb’s traffic data reveals repeated visitor spikes to DirecTV Now’s help page, beginning at launch and continuing thereafter. While a downward trend can be observed over time (traffic spikes are becoming smaller and fewer on DirecTV Now’s help page), DirecTV Now’s technical issues have continued. One can’t help but wonder if the decrease in help page traffic is the result of the service having fewer users altogether.
Will win back campaigning work?
AT&T’s win back campaigning for DirecTV Now began in February and indicates that plenty of trial users decided not to keep the service. We estimate that AT&T sent over 450K win back emails over the course of February. The email, which encouraged former customers to return for four days of free HBO, Cinemax and Starz, was the most-emailed win back campaign to date, with a projected volume of 118K (pictured here). Based on these projected volumes, at least 18% of those customers who received a welcome email in in December or January are now being targeted to come back.
AT&T also used free HBO as a way to encourage stickiness among its subscribers who, in December, prepaid for three months of DirecTV Now service in order to get a free Apple TV. On March 8, the provider sent an estimated 200K emails announcing the offer, which was positioned as a thank you “for being one of our most valuable customers.” Other customers were offered $5 off of their bill for six months, as an incentive to keep the service.
These offers might be enough to compensate frustrated customers for technical issues, and keep them from churning. Plus, early subscribers that signed on before January 9, have another incentive to stick around—the grandfathered $35/month rate for the “Go Big” package, which they will lose if they leave.
What we think
The question for the service now becomes one of growth: will AT&T be able to bring on new subscribers, especially as the marketplace will soon include new competition from YouTube and Hulu? AT&T will have to get DirecTV Now’s technical issues under control if it can hope to keep the subscriber base growing, particularly as the new competitors enter the space. Additionally, we would expect to see another round of attractive, limited-time offers for brand new customers, as soon as AT&T feels confident in the stability of the platform.
*SimilarWeb is the standard for understanding the digital world. With the largest international online panel consisting of hundreds of millions of devices, SimilarWeb provides granular insights about any website or app across industries. Global brands such as Google, HSBC, eBay, L’Oréal and Adidas rely on SimilarWeb to understand, track and grow their digital market share. Learn more at www.similarweb.com.
**Data as of 3/10/17 at 9 AM CST.
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.
