Cordcutting continues to take a bite out of AT&T

AT&T revenue declined over the last three months as customers of its legacy DirecTV satellite service and other pay TV options flee for cheaper online services, the company admitted this week.

The news comes a few months ahead of AT&T’s own blockbuster streaming service HBO Max, which it hopes will prove popular enough with consumers to offset some of the loss from its declining traditional services.

On Wednesday, AT&T said it lost 945,000 traditional pay TV subscribers and shed 219,000 subscribers of its online linear TV service AT&T TV Now (formerly DirecTV Now) in Q4 2019, amounting to a net loss of over 1 million pay television customers over the last three months.

The declines are attributed to higher programming and distribution costs, which result in fee increases for customers of AT&T U-Verse and DirecTV. AT&T has steadily raised the price of AT&T TV Now over the years from its introductory price of $35 a month to around $70 a month, a price legacy TV customers expect to avoid when switching to an Internet-based TV service.

Now AT&T is going all-in on HBO Max, it’s $15 a month service that will incorporate TV shows and movies from WarnerMedia’s vast content library (WarnerMedia is a subsidiary of AT&T).

AT&T executive Joh Stankey told executives on a conference call Wednesday that HBO Max’s launch would be “critical” to the telecommunication company’s success over the coming years, branding it as “the highest-quality [streaming service] in the market with a great experience, better curation and higher percentage of culturally relevant offerings.”

Among those relevant offerings: Shows like “Friends” and “Rick & Morty” that were traditionally licensed to third party streaming services as well as the ViacomCBS-owned “South Park,” which AT&T nabbed from Disney-owned Hulu for around $500 million, according to the trade publication Variety.

HBO Max is expected to launch in mid-April. It will join two other HBO streaming offerings: HBO Go, which is offered to cable and satellite subscribers as part of their subscription, and HBO Now, a standalone service that doesn’t require a traditional pay TV package. And it will have increased competition from Comcast’s NBC, Disney and Apple, all of whom have launched or will launch streaming services of their own.

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