Why Is DIRECTV Streaming SO Costly?
Another big cable and satellite TV provider in the States that provides live streaming services for cord-cutters is DIRECTV. However, their streaming packages like DIRECTV STREAM are not cheap and the prices are relatively high. Priced at $70-150 per month depending on the channel packages selected these can prove to be as expensive or even more than regular cable services. Nevertheless, why is the streaming of DIRECTV so expensive relative to other services such as YouTube TV, Hulu Live TV, or Sling TV which provide more options at significantly cheaper prices for most individuals? That is why here are some potential reasons:
The Costs of Content
As for any Live TV streaming service provider, the cost of content is often the largest of all the expenses they incur. This is unlike Netflix or other on-demand streamers that can purchase content libraries in one shot, live TV services require to pay network carriage fees for the channels. Moreover, market giants that include Disney, NBCUniversal, and Viacom CBS are not cheap acquisitions. Directv was forced to pay millions of dollars for the rights to programs like ESPN, ABC, NBC, and MTV. To be honest, with their plans that provide 90+ channels, those costs may be higher than expected when compared to the skinny bundles that are so popular nowadays.
Of course, DIRECTV isn’t the only streamer bearing such expenses. Yet traditional cable/satellite providers with more than 15 million paid users and high brand awareness, might be weak in negotiating with networks in comparison to new streaming challengers. Well, this means DirecTV might be paying for higher rates which are then charged to stream customers.
Legacy Infrastructure Costs
Unlike streaming-only services, which are built Ground up for the digital age, DIRECTV has all the overhead costs of labor and overheads that come with managing a satellite television service that has been in operation for over a quarter of a century. They have satellites orbiting the sky, server farms to handle the pictures to air, technicians going from house to house to install and fix dishes–the expense list is endless.
Once again, this is not a unique problem with DIRECTV. Also, other cable-turned-streaming providers such as Dish Network, Comcast, and Spectrum still have those same legacy costs to cover their old-fashioned TV operations. But that older infrastructure still requires updating because customers are moving to streaming and this offset many of those technology upgrades, which must be in the billions, onto the customers by increasing price.
Pathways to Profits for a Company in a Mature Business
In other words, DIRECTV and other traditional first TV PROVIDERS are not blind to these trends. Having been in the pay-TV business where subscriptions have been declining for several years now, they know well that their prospects are in less remunerative streaming in the longer run.
Though they are putting capital into growing solid DIRECTV Stream platforms to transform the business, streaming will likely never be as cash-generative for them as the era when millions of homes were subscribing to basic-broadcasting bundles at $100+ per month that contained fees for fancy packages.
So in the meantime, it makes sense that DIRECTV would try to extract the last ounce of cash out of their still decently-sized satellite subscriber base–even as it alienates those very consumers with high prices that only help to accelerate cord-cutting. The income helps to offset their decline in physical sales for the transition to streaming while the shareholders are satisfied with the sustained growth of revenues in the short term.
Exclusivity and Live Sports
One of DIRECTV’s conventional strengths has always been NFL Sunday Ticket–the highly popular out-of-market football offering that football enthusiasts dearly cherish. Though it can be purchased on its own for AT&T TV and recently for the DIRECTV Stream, Sunday Ticket is tied to a DIRECTV satellite subscription thanks to an exclusivity agreement signed with the NFL.
Thus for the avid football fan who can not get his local team’s match on TV, DIRECTV satellite is the only place where Sunday Ticket can be obtained. Now, the NFL agreement alone is above $1 billion per year, providing the league a strong trump card to not only protect valuable clients but also stem the tide of streaming.
The same can be applied to other regional networks such as Bally Sports that broadcast local games. Keeping the prospect of live sports that other would-be subscribers cannot currently access lets DIRECTV increase its prices compared to competitors. For fantasy football fanatics and NBA League Pass loyalists for sports bars, the capacity to watch LIVE games remains authoritative.
Bundling Benefits
DIRECTV also highlighted as a strength with the beginning of the evolution of the DIRECTV Stream platform, is the integration of services and products with wireless industry behemoth AT&T, who acquired the DIRECTV brand in 2015 (before the current merger with Discovery).
This means that DIRECTV customers will be able to save money since they can be able to access other services such as mobile phones, internet, and streaming services through the same bill. Such kinds of cost savings could help to neutralize the higher standard pricing of the DIRECTV company.
Of course, such bundles also help AT&T tie customers to multiple services to minimize their tendency to go elsewhere. After you have connected an internet connection, a wireless plan, and an HDMI live TV package, it becomes very difficult to switch the providers than when it comes to the standalone streaming apps.
The pros and cons of video quality
Possible justifications for the high costs of DIRECTV’s streaming might be the actual benefits in the quality of the videos. They claim to have experienced more growth than some of their newer streaming competitors, to have a solid, reliable architecture for streaming in high definition and even up to 4k.
YouTube TV, Hulu + Live TV, and others have indeed evolved but, according to the reports, even today, the service of DIRECTV is better than many of its rivals in terms of low rates of buffering, consistency of the channel, and compatibility with 4K sports. For the real home theater enthusiast, who does not want to settle for anything less in terms of video quality and would be willing to pay a premium price for a component, then the superior performance could offer a degree of justification for the expensive prices.
Well, streaming quality depends on factors such as the internet connection, and the device used in the streaming, among other factors that are beyond the provider’s control. However, DIRECTV Stream seems right in a position to offer a high-level service IF customers have the hardware to back them up.
Future Outlook
For the current high prices of streaming access, the factors outlined above can at least explain why DIRECTV has charged high prices for today’s streaming access. Well, as AT&T keeps on expanding on the technology at hand in the DIRECTV Stream, those satellite costs to the legacy ones will decrease in the future. As each quarter, continues to have more subscribers shed off due to cord-cutting, the networks might be willing to negotiate those high carriage fees to maintain their customer base.
DirecTV Stream is however now available through AT&T without a contract and this may signify that in the future they may offer even lower prices to counter disruptors such as the big tech companies like YouTube that are offering the services at almost half the price of DirecTV Stream. And after NFL Sunday Ticket offers, nourishing 5G mobile, and maintaining cash flow as Discovery merges, don’t look for low DIRECTV Stream prices in 2022.
While there is little doubt that the future of the market lies in branded entertainment, news, and sales channels for niche products, the main value proposition for customers continues to be live sports and regular channels. However, as more consumer-oriented platforms appear on the market, the company, which is part of AT&T, has to achieve the highest revenue per user in the shortest possible time while maintaining the availability of the service at a relatively low price to remain relevant in the global streaming battles. However, they pointed out that the idea of the prices and packages not being flexible enough may come back to haunt the NFL, even if Sunday Ticket has exclusive live NFL games.
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