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DirecTV Now plagued with faults, but uptake not slowing

AT&T's streaming service only behind HBO's despite user complaints

AT&T's freshly hatched DirecTV Now OTT streaming service is forecast by most industry analysts to hit around 1 million subscribers after one year, following its launch at the end of November, but here at Faultline Online Reporter we believe the service has the potential to take off on a much bigger scale – providing it can overcome some initial obstacles.

The birthing process of DirecTV Now has not been straightforward. It has been burdened with technical difficulties resulting in a surge of user complaints since its launch, with users highlighting streaming hiccups, inaccessible features, and billing problems.

To add insult to injury, AT&T has reportedly refused refunds to its disgruntled user base. A bombardment of technical issues is not at all what we expected from DirecTV Now, considering AT&T bulked up on its streaming software clout – namely the expertise of Canadian multiscreen software firm Quickplay Media, which was tasked with integrating DirecTV Now.

AT&T bought Quickplay so it could become agile, and offer the frequent updates and QoS (quality of service) guarantees that only a software company can offer (or so it thought). Quickplay is experienced in handling high levels of traffic, removing choke points for efficient delivery of OTT services, but even the months of planning and development were apparently not enough to prepare for the popularity of DirecTV Now.

There is little doubt that the prospects of DirecTV Now can and should be huge, so the manner in which AT&T is treating the first tasters of its new service – i.e refusing refunds, is perhaps unfortunate. Despite these issues, downloads of the app in the first five weeks were not negatively impacted, according to UBS’ Evidence Lab, the app data monitoring arm of the Swiss financial services firm.

UBS data claims that DirecTV Now is only behind HBO Now in terms of app downloads within the first five weeks, and has exceeded download rankings of rival services Sling TV, Go90 and Showtime. This may be true, but it has now been seven weeks since DirecTV Now launched, and contrasting data from App Annie shows that its download ranking in the US Entertainment category of the iPad app store fell from 21st last week, to 60th this week. It will surely plummet further by the end of this week, as more frustrated consumers fill the web forums.

If UBS's research is accurate, it shows that somehow a $35 streaming package has been more enticing to US consumers in its first five weeks than Verizon's free, ad-supported offering Go90. Verizon has weak content deals in comparison, as Go90 was designed to be an addition to the current US landscape with mostly OTT content, not a game changer.

Go90 racked up around 2 million subscribers in a year, launching in October 2015, but has less impressive regular active viewers. Neither UBS or App Annie can provide exact figures for downloads, but data from App Annie showed that HBO Now topped the US iPad revenue chart in its first month, meaning revenues of between $30 million to $50 million. With a subscription costing $15 a month, this works out at downloads in the region of 2 million to 3 million in its first month.

Doors will continue to swing open for DirecTV Now if discussions for reseller deals with CenturyLink and CBS ever come to fruition – something we have been saying all along. CBS boss Leslie Moonves said one week after the launch of DirecTV Now that CBS is in discussion with AT&T.

This was followed by CenturyLink's CFO weighing in with comments about how he'd like to take a look at whether or not it could resell DirecTV Now, rather than go with his own company's OTT service, which it has been working on for a while now.

The most critical thing now is whether or not AT&T/DirecTV allows observers to follow OTT subscriptions in its quarterly reports, and our guess is no, because no other OTT service gives regular quarterly updates on customer numbers, and have no plan to until they account for a significant portion of their business.

AT&T said in a statement: "With any new technology there are going to be fixes that need to be made. While we understand we still have work to do, overall feedback on DirecTV Now has been very positive. We're continuously updating the app to provide a better experience for customers. We encourage customers to keep the app updated."

Copyright © 2016, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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