What Are ‘Cord Cutters’? AT&T Has No Idea

AT&T Fundamentally Misunderstands 'Cord Cutters'

I think executives at AT&T are under the impression that cord cutters, the people who have switched from traditional cable TV or satellite to something like Netflix or Hulu (or illegal downloading), made that decision because they literally hate cords.

That’s the only conclusion I could arrive at as AT&T unveiled DirecTV Now: a digital TV service that lets you watch traditional TV channels at traditional cable prices on the Internet. For a promotional price of $35 a month (eventually rising to $60), customers will receive “more than 100 TV channels in a ‘fat bundle’ of both on-demand and live programming.”  So, remember when you were angry that you were paying $60 for cable to get 100 channels when you only watched 6 of them, so you canceled your subscription?  Now AT&T has come up with a way for you to do that again, but this time — on the Internet!

The current package options, based on images floating around the Internet, are EXACTLY what you had before. Want CNN? You gotta take Fox News too. Want FX? Hope you like Lifetime, because it’s included. ESPN viewer? Well you probably want Nickelodeon too, right? ALL of these are in the same package. The package with the NHL network also has Oxygen. Perhaps I’m stereotyping here, but most hockey fans I know wouldn’t watch a show called ‘Battle of the Ex Besties’ if they had a gun to their balls.

 

directv-options

According to DSLReports, the service does not include any sort of DVR functionality.  Meaning, you can’t record your favorite shows while you’re away or while you’re watching a different show.   And you’ll still only have access to what the cable company was giving you for on demand options (very little, and certainly not the option everyone wants, which is everything).

This is mind blowing to me. It’s like executives have absolutely no understanding of why people are canceling their cable services. So let me break it down for you, fictional executives who are reading this article!

Why Customers Cancel Their Cable Services:

1. The price.

Netflix is $10. There’s no live TV, and there’s also a lot of unwatchable shit on there. But when you’re paying $10, you can put up with things like that (especially when it’s commercial free, which DirecTV Now is not). People don’t want to pay $50 or more for cable, especially when they’re also paying that much for their Internet connection.

2. The inconvenience.

Not everyone is at home when their favorite show is on. And more importantly, not everyone wants to watch their favorite show when a network executive has decided it’s time.  People want to do things on their own time.  And this is only going to become more of a way of life for the generation growing up on Netflix and YouTube, who only know that The Walking Dead is on AMC because the narrator’s voice says so at the beginning of the file they downloaded.  And all they care about is that they can download it on Sunday night at some time and watch it whenever they feel like throughout the week.

It’s as if AT&T has never spoken to a person who switched from traditional TV to another solution.  Not a single one.  Or they did, and they found the one person that said “yeah, I got rid of cable because my TV broke,” and they said “OH! So everyone just doesn’t own TVs anymore… we gotta put the same service on the Internet!”

How can AT&T offer this fantastically mediocre service for an introductory price of $35?

According to the Washington Post, they can’t.

“Previous estimates by the firm MoffettNathanson suggested that at a flat rate of $35 a month for 100 channels, DirecTV Now would be earning roughly $1 per subscriber each month after factoring in the costs of acquiring television content from the likes of HBO, ESPN and Discovery, among other producers.”

So, if they had 10 million subscribers, only 20% of what Netflix has in the US, they’d have $10 million monthly for other operational costs and profit.  Only $10 million!  How would their executives afford to feed their yachts!?  This is another thing cord cutters don’t care about: mega corporations’ profits.

As someone who ditched cable long ago, I’ve been hoping networks and cable channels would offer their own options.  They won’t because they have to keep the cable and satellite companies happy (for now).  But I’d be way more interested in paying FX, AMC, and HBO a monthly fee for access to all of their programming (live and on-demand, current and past), and never deal with a major cable or satellite provider ever again (except for my Internet, that’s pretty unavoidable).  THAT is what people want: the ability to select what they want, and nothing more.

AT&T needs to reach out and touch someone…

someone that knows what the fuck the average person wants (and preferably, someone young enough that didn’t actually get the reference I just made).  People want options.  They want to pick every individual channel they watch WITHOUT having to buy some shitty “basic cable” package.  And they want to watch the shows on those channels on their time.

Hell, a lot of people don’t even give a shit about the networks, they just want the individual shows!  Imagine a service that said “select any 30 shows from any networks we have for $30 a month, and you can substitute shows in and out whenever you want and watch them whenever you want”?  That service would probably go broke in 2 years, BUT it’d go broke with a shitload of subscribers!

If viewers don’t get what they want, they’ll find other options.  They’ve already found other options, legal or otherwise, for much cheaper (doesn’t get much cheaper than free, right all you Kodi users out there?)  And you know what won’t lure them back to spending money with you?  Cable, but on the Internet.  They didn’t literally cut the cord, and they didn’t cancel because they wanted a wireless option to watch TV.

They don’t hate cords, they hated what was coming out of it.

NOTE: Buckley is available as a consultant for cable companies. He accepts old yachts as payment.

Top image by sergejf, CC by 2.0.

12 Responses

  1. @ryanhickmam

    Great points, but the math is def off. You wrote

    “So, if they had 10 million subscribers, only 20% of what Netflix has in the US, they’d have $10 million annually for other operational costs and profit. Only $10 million! How would their executives afford to feed their yachts!? This is another thing cord cutters don’t care about: mega corporations’ profits.”

    That would be $1 / sub / month X 10m subs = $10m / month… or $120m in revs annually.

    Reply
    • Josh Nerstheimer

      Hey Buckley, just wanted to mention. The single channel thing is not going to happen. Seriously if you have to pay every channel you want 5.00 a pop or 10.00 in the case of CBS with no commercials. It starts racking up. Six channels you already met or exceeded what you would be paying for a Directv Now Subscription. So no the single channel thing would not work. HBO Now for example is 15.00 dollars. Netflix is great but you cant get up to date stuff. Those so called skinny bundles that Verizon does. Little to no profit. Sorry but what people want is not always economical.

      Reply
  2. Scott

    A gun to their balls? That was truly rightous. I’m going to be saying that all day now. Good article and I feel same way. It’s still not what WE want as a consumer

    Reply
  3. victor

    so here’s the the thing…

    1. the $35/month price stays locked for as long as you subscribe if you get in now.
    2. if you prepay 3 months upfront ($105), they will send you an apple tv (4th gen, 32gb) for free (normally $149)
    3. you are never going to get an a la carte option. and if you do, you’ll be getting less channels for the same price.
    4. this is the most channels for the cheapest price out of everyone right now in the OTT segment.
    5. adding on HBO is just $5/month (normally $15/month through HBO Go)

    Reply
    • Buckley

      But that’s where they get you… “it’s the most channels for the cheapest price”. It’s cable again. 100 channels and I watch 6. Now, if they’re going to tell me there’s never going to be a way for me to have those 6 for cheaper than it costs to buy 100, then I guess I’m never going back. Suits me just fine.

      Reply
      • victor

        for me, i pay $180/month for cable tv in my area. this $35 package has 98% of the channels i like for $35. the rest of the shows, i can pirate.

        Reply
        • Ben

          If you’re fine pirating some shows, why not pirate them all? The moral/ethical boundary is crossed with one pirated show, so after that, there’s really no reason to stop.

          Reply
        • Jj

          If you don’t watch sports you can legally get all your shows for less through other sources. For example, you can buy season passes. Or you can save even more money by waiting for them to come out on Netflix/Hulu/Amazon prime.

          Reply
  4. @ryanhickmam

    Thinking about the cost to serve the content OTT, that $10m would burn fast. HD video streamed over the web isn’t cheap by any means. Especially if you want performance, you’re real time transcoding for adaptive bit rates.

    From a math point of view, 1 GB of data per hour for each stream of standard definition video, and ~ 3 GB per hour for each stream of HD video PER USER.

    Netflix avg user watches 20min / day. So that would calculate to be (10000000*20)30 = 6billion hours of streaming.

    Those gigs aren’t free.

    So it will be tight.

    So those 10 million subs…

    Reply
  5. Daniel

    In the uk, we kind of have this already where tv programs are. streamed from the stations website. This paid by either tv linces £12.20 monthly bbc channels or adverts on the comerical channels, without fees (c4′ itv. Itv2, 5, more 4 etc). This setvice stream content that can be timeshifted. Our population is much smaller than American. So if you charge for internet streaming ontop of advertising revenues for the rights to receive the stream, the profit margins must be massive.

    Reply

Leave a Reply

Your email address will not be published.

Verify Your Humanity *