AT&T Inc.T 5.57% launched a satellite into orbit last summer for its DirecTV service. It would be the telecom and media giant’s last.
More than five million U.S. households cut the pay-television cord in 2019 in search of cheaper and more flexible entertainment. Most of those declines came from DirecTV viewers dropping the dish.
On Monday, the company released its answer to that trend: AT&T TV, a Google assistant-equipped set-top box that streams live TV channels over the internet. The service, which like DirecTV offers more than 100 channels through its basic package, is available nationwide for $49.99 a month. The company spent several months testing it in a few local markets.
“Consumers are going to go where they want to go and where they have choice they are going with something over the top,” said Jeff McElfresh, chief of AT&T’s communications division, which houses broadband, TV and wireless service.
Keeping up with all of AT&T’s many video-service brands.
U-verse: First launched in 2005, the U-verse brand originally covered broadband and internet-based television from AT&T Inc. Its video service runs over a dedicated private network, much like cable.
DirecTV: AT&T bought the country’s largest satellite-TV provider in 2015. It remains an important pay-TV competitor, though AT&T is steering more new customers toward AT&T TV, which features most of the same channels without a satellite dish.
AT&T TV Now: Launched in 2016 as DirecTV Now, this service offers what is known as a skinny bundle of live TV channels through smartphones, web browsers and third-party devices such as Roku. Its customer base shrank in 2019 as its price and channel count grew.
AT&T WatchTV: An app launched in 2018 with an extra-skinny lineup of TV channels. It is offered free to subscribers with AT&T’s premium unlimited wireless plans. The company hasn’t said how many customers use it.
AT&T TV: The company’s main brand for live channels streamed over the internet to cellphones and TVs. Its bundles are similar to DirecTV’s satellite packages, but lack NFL Sunday Ticket.
HBO Go: A “TV Everywhere” service launched in 2008, HBO Go allowed subscribers to watch the premium channel’s shows over the internet after proving they had already paid through a cable or satellite-TV bundle.
HBO Now: HBO’s first true “over the top” version of the channel. Its app lets subscribers watch shows on-demand for $15 a month.
HBO Max: The flagship brand for movies and TV series that AT&T controls the rights to through its WarnerMedia division. HBO Max will make its debut in May. The streaming service is an expanded version of HBO, though executives say it will grow to include live sports and ad-supported programming.
AT&T TV adds another wrinkle to an already chaotic video market, where new streaming services are competing for consumer budgets and time. Walt Disney Co.DIS 1.98% and Apple Inc.AAPL 9.31% have entered the market with new video offerings, and AT&T is preparing to launch its own in May called HBO Max.
Services offering live TV have suffered the brunt of this competition, no matter which technology they use. Sony Corp.SNE 3.15% last year discontinued its rival PlayStation Vue service, citing rising costs. DirecTV rival Dish Network Corp. posted its first quarterly decline in subscribers for its Sling TV streaming service.
AT&T didn’t design the new TV box to replace any other product it already offers, Mr. McElfresh said. But it differs from the company’s existing satellite and fiber-optic TV services that use closed networks and have about 19 million video customers. AT&T TV rides over the public internet, making it available to anyone with a suitable broadband connection.
“This is where the market is headed,” he said.
The new box offers the company another advantage: It costs less to install. AT&T plans to ship new customers its AT&T TV hardware with self-install instructions, avoiding the need for expensive technician visits to homes.
Satellite TV has some of the highest subscriber acquisition costs—the combined expense of marketing to, signing up and installing gear for each new customer—in the telecom business. Dish Network said it spent about $800 for each new satellite customer it gained last year.
AT&T didn’t provide an estimate of its satellite-subscriber acquisition costs, though Mr. McElfresh said the company expects to spend roughly half as much money gaining new AT&T TV customers as it has adding traditional pay-TV subscribers.
New satellite-dish installations add about $150 to $200 to AT&T’s expenses, according to Craig Moffett, an analyst for boutique telecom research firm MoffettNathanson.
Engineers started working on the product more than a year ago, but the project suffered several delays. Executives say the service is better for it. The box now acts something like a Roku or Apple TV device, combining third-party services such as NetflixNFLX 3.26% and YouTube with content offered through AT&T’s channels. Its remote control includes a voice-activated Google assistant.
AT&T plans heavy promotions to get its new streaming portal into customers’ hands. The box works with any broadband connection, so Comcast Corp.CMCSA 5.17% and Charter Communications Inc.CHTR 0.80% cable customers could subscribe. Mr. Moffett said the service could boost AT&T’s numbers in some areas.
“For example, satellite TV has always under-indexed in urban apartment buildings, where a look angle to the southern horizon often isn’t possible,” he said. “On the other hand, it won’t be much help in the core rural markets, where a reliable broadband connection often isn’t available.”
Many rural customers with dial-up internet speeds won’t be able to use the streaming box and still need DirecTV satellite dishes to receive the same channels. The NFL Sunday Ticket subscription package is also unavailable over AT&T TV because of license restrictions.
The deepest discounts are geared toward AT&T’s fiber-optic internet base, where growth slowed in recent months. The company drops the channel package price to $39.99 a month when bundled with its 1-gigabit broadband service for another $39.99 a month. That promotion also includes a contract, which many consumers have avoided.