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The newest fascination in the subscription pay TV ecosystem is a shift toward the "skinny bundle." After years of increased costs and higher-channel packages, the trend is now toward lower-cost, smaller-channel offerings. The impetus for this reversal is many consumers are now choosing to forgo the product altogether (cord cutters) or have become increasingly price-sensitive and are now looking to save money on their service (cord shavers).
Until recently, Dish Network has been the most aggressive in embracing the skinny-bundle phenomenon with its SlingTV offering. Dish's product offers more than 20 channels for $20 per month including highly desired channels like The Walt Disney Company's ESPN and ESPN2 and Time Warner's CNN, TBS, and TNT. Additionally, SlingTV is a streaming-based service delivered via the Internet, which negates the need for additional television equipment like expensive cable boxes.
However, it seems another competitor is moving quickly into the space. AT&T is leveraging its recent DirecTV purchase to make a competing streaming-based service with its DirecTV Now, DirecTV Go, and DirecTV Preview services. From the broad outline of these offerings, it seems SlingTV may be facing a strong competitor.
AT&T has an advantage, but is it enough?
Will AT&T succeed in its goal to create a value-accretive streaming-based service? Right now, it appears Dish Networks has been unable to achieve this goal with SlingTV. At this point, it appears Dish's service is mostly cannibalizing higher-paying customers rather than encouraging those without TV service to sign up. AT&T appears to attempt to solve Dish's shortcoming with three new services: DirecTV Now, which is designed to replace traditional cable, DirecTV Mobile, an affordable streaming service designed for smartphone and tablet consumption, and DirecTV Preview, a free ad-supported service with limited content.
Source: Dish Network
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Each package attempts to present a value proposition to those currently without subscription pay TV. For cord shavers who still want content at a lower price, DirecTV Now is a good fit for this crowd and is perhaps the best direct comparison to SlingTV in terms of programming options. DirecTV Mobile seems to be better suited for those currently without pay-TV (cord cutters and cord nevers) by focusing on mobile-heavy millennials. With DirecTV Preview, the company is embracing a freemium model in an attempt to lure those without pay-TV into paying subscribers.
DirecTV's new packages will be more expensive than Dish... or will it?
At this point, AT&T hasn't commented on pricing outside of mentioning the prices will be competitive to services offering the same content. SlingTV competitor DirecTV Now appears to be a larger-channel package, which stands to reason the cost will be higher. However, to this point SlingTV has been offered independently of Dish's satellite Internet or local-Internet providers, instead positioning SlingTV as a stand-alone product.
This leaves an opening for AT&T to package DirecTV Now and DirecTV Mobile alongside an Internet subscription (including mobile) with a bundle offering. The company has already done this with its mobile-phone network by introducing unlimited mobile data for customers that also have DirecTV service. Further leveraging its DirecTV division through DirecTV Now and DirecTV Mobile by bundling these services with AT&T's home Internet and mobile Internet offerings, respectively, may find a receptive audience among those currently without TV service. DirecTV Mobile is truly an intriguing option that should be a natural fit for millennials if properly presented. More broadly, however, these packages signify there's demand for lower-cost pay-TV services.
The article AT&T's DirecTV Will Offer a SlingTV Competitor originally appeared on Fool.com.
Jamal Carnette owns shares of AT&T. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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