AT&T's DirecTV Now to Offer Free Roku to Prepaid Customers
U.S. telecom behemoth AT&T Inc. T has chalked out another promotional plan that gives customers a free Roku Premiere set-top box when they prepay DirecTV Now for two months. DirecTV Now is AT&T’s over the top (OTT) online streaming service.
In late May, DirecTV Now became available on select Roku devices. Currently, the online streaming service is offering the free device in four tiers, which include Live a Little ($35 per month for 60 plus channels), Just Right ($50 per month for more than 80 channels), Go Big ($60 per month for 100+ channels) and Gotta Have it ($70 monthly for more than 120 channels). A Roku Premiere charges $69.99 and supports 4K resolution.
Earlier, AT&T gifted free HBO for a year to old and new subscribers of its DirecTV Now service. This offer came on the back of another existing offering of a free Apple Inc. AAPL TV streaming device (set-top box) for anyone who prepays for three months of service (offer ended on Mar 30, 2017).
This latest move is aimed to boost the number of subscriber additions for the service, which reportedly saw its subscription count declining in the first quarter of 2017. As of Mar 31, 2017, total video connections at this segment were 25.032 million, down 1.2%. Total revenue at the Entertainment Group segment grossed $12,623 million, dropping 0.3% year over year (post the DIRECTV acquisition).
Launched on Nov 28, 2016 with an introductory promotional offer of 100 channels for $35 per month, AT&T’s DirecTV Now has been performing quite well. The OTT service helped the company gain a total of 25,265,000 video connections as of Dec 31, 2016. Moreover, total revenue at the Entertainment Group Segment grossed $13,206 million, up 1.6% year over year (post the DIRECTV acquisition).
On a similar note, U.S. national wireless carrier, Sprint Corp. S recently launched a marketing promotion, offering a year of “unlimited” talk, text and data to users who switch from Verizon Communications Inc. VZ, AT&T or T-Mobile US Inc. TMUS. This initiative intensified the ongoing mobile service pricing war among the four nationwide service providers in the U.S. wireless market. Per the deal, customers who switch to Sprint before Jun 30, 2017, and bring their own devices and SIM cards will get free service until Jul 31, 2018 for up to five lines. The company will not charge any activation fees.
We believe that the intensely competitive U.S. wireless market and lucrative promotional offers by other wireless carriers have caused the decrease in subscriber count. AT&T has been trying to lure customers with attractive discounts as a counteractive measure against the competition posed by smaller carriers like T-Mobile US & Sprint Corp. who have been implementing similar strategies.
On Jun 1, 2017, AT&T unveiled a new video and unlimited wireless offering for AT&T Unlimited Choice customers and AT&T Unlimited Plus customers. The Unlimited wireless offering came in the form of a contract-free or credit-free system. AT&T announced a range of freebies and cash credits to bring in customers and lower the churn rate. However, the expenses and marketing costs related to the promotions led to high cash and heavy losses for the company.
Currently, AT&T is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past one month, share price of AT&T inched up 3.66% but failed to beat the Zacks categorized Wireless National industry’s 4.06% rise.
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