DirecTV Now customers will soon be introduced to AT&T TV Now as the streaming service rebrands with new apps and prepares for the launch of WarnerMedia’s HBO Max streaming service early next year.

The streaming service, originally branded as part of the DirecTV platform, has suffered major subscriber losses (168,000 in the last three months alone) after reducing the size of its TV packages and raising prices twice in the last year. To date, more than 26% of DirecTV Now’s subscriber base has defected to other streaming services, with no end to those losses in sight. AT&T’s DirecTV satellite and U-verse TV have also turned in stunning reductions in the number of subscribers, losing at least two million customers in the last year, with 778,000 departing during the second quarter of 2019.

AT&T has stopped offering deep promotional discounts to most customers threatening to cancel over rate hikes, and subscribers are making good on their threats to leave. The company is also embroiled in two major retransmission consent disputes that have left customers in several cities facing a blackout of as many as three network affiliated local TV stations. With higher prices for fewer channels, and plenty of alternatives, customers are turning to other providers.

AT&T’s 2015 purchase of DirecTV, in retrospect, appears to have been a major business mistake, according to some Wall Street analysts. Originally intended to help AT&T manage the spiraling costs of video for its U-verse TV service by winning more generous volume discounts from programmers, the DirecTV acquisition came just before the phenomenon of cord-cutting took off, leaving all of AT&T’s video services vulnerable to customer losses. DirecTV Now initially benefited from cord-cutters attracted to its generous package of channels at a low price, but an executive decision to reduce the channel lineup while raising prices drove off what executives characterized as ‘undesirable customers only looking for deals.’

AT&T has also been experimenting with a separate streaming service that will likely eventually replace the satellite-based DirecTV. Beta testers have been providing feedback to AT&T about a new set top streaming box intended to work with this service, now to be called AT&T TV. AT&T is also reducing the number of apps required to access its myriad of video services. AT&T TV and AT&T TV Now customers will download the same app, only the channel lineups will be different. The company is targeting AT&T TV Now on cord-cutters looking for a cheaper and smaller video package, while AT&T TV will include a range of packages likely identical or very similar to DirecTV’s current satellite lineup.

If AT&T TV is successful, AT&T can cut costs incurred installing and maintaining satellite dishes and also eventually decommission DirecTV’s satellite fleet. Rural satellite TV customers without access to broadband may be in a difficult position if that happens, and the country has still not resolved the rural broadband challenge.

Even with these changes, AT&T customers are faced with a large menu of potentially confusing video options. AT&T sells traditional live cable TV services through AT&T TV, AT&T TV Now, DirecTV, and U-verse. It also offers a stripped down WatchTV package offering 35 channels for $15 a month or less. Premium customers still trying to tell the difference between HBO Go and HBO Now will soon also contend with HBO Max. Cinemax has its own similar offerings for cable TV customers and direct to consumer subscribers.

Comcast has put its proverbial finger to the wind to define an “appropriate” data cap it declares “generous,” regardless of how subjectively random that cap happens to be. Although 1,000 GB — a terabyte — usage allowance represents a lot of internet traffic, more and more customers are finding they are flirting with exceeding that cap, and Comcast has never been proactive about regularly adjusting it to reflect the reality of rapidly growing internet traffic. That means customers must protect themselves by checking their usage and take steps if they are nearing the 1 TB limit.

If you do exceed your allowance, Comcast will provide two “grace periods” that will protect you from overlimit fees, currently $10 for each extra 50 GB allotment of data you use. Another alternative Comcast will happily sell you is an insurance policy to prevent any risk of overlimit fees. For an extra $50 a month, they will take the cap off your internet plan allowing unlimited usage. But $50 a month is close to paying for your internet service twice and is indefensible considering how little Comcast pays for its customers’ internet traffic. It is just one more way Comcast can pick up extra revenue without doing much of anything.

Customers that do regularly break through the 1 TB data cap often have a guilt complex, believing they have no right to complain about data caps and should pay more because they must cost Comcast a lot more money to service. In fact, Time Warner Cable executives broadly considered internet traffic expenses as little more than a “rounding error” to their bottom line, according to internal emails obtained by the New York Attorney General’s office. Managing customers’ data usage is far less costly than network plant upkeep, the regularly increasing costs of video content, and expenses related to expanding service to new locations.

One VentureBeat reader investigated what chewed through Comcast’s data allowance the most, and it wasn’t easy:

Xfinity pretends to make this easier for you, but that’s a load of horsesh*t. Its X-Fi app claims to give you usage stats for your connected devices — only nothing appears up-to-date. The phone I was using to look at the X-Fi app doesn’t even appear on the connected-devices list. You also have to look at each device individually. I saw no way to sort a list of devices by data usage, which would obviously help a lot.

Some of the biggest data users are connected households, where multiple family members use a range of devices, often at the same time. Customers with multiple internet-connected computers, video game consoles, and streaming devices are most at risk of exceeding their cap.

Video Games Consoles/PCs

The biggest data consumption does not come from gameplay itself. It comes from frequent software updates, some exceeding 50 GB. If you play a number of games, updates can come frequently. In the case of the VentureBeat author, 17% of daily usage came from the home’s primary desktop PC. Another 12% was traced to the family’s Xbox One. An in-home media server that also runs Steam and auto-updates frequently was also suspect.

Streaming Devices

If you are not into video games and do not depend on cloud storage or large file transfers to move data back and forth, streaming set-top boxes and devices are almost certainly going to be the primary source of your biggest monthly data usage. Video resolution can make a difference in how much data is consumed. If you are regularly approaching or exceeding your monthly cap, consider locking down maximum video resolution for streaming on large televisions to 720p, and 480p for smartphones. Some streaming services offer customized resolution options in their settings menu.

Autoplay, also known as the ‘binge’ option can also consume a lot of video when a service automatically starts playback of the next episode in a series. Some people switch off their televisions without stopping video playback, which can mean you watched one episode but actually streamed six or more. Check the streaming software for an option to not autoplay videos.

Remember that cable TV replacements like DirecTV Now and YouTube TV will continue streaming live broadcasts until you stop them. Do not just switch off the television. Many live/linear TV apps will prompt you every few hours if you have not changed channels to make sure there is someone still watching. If you do not respond, streaming will stop automatically.

Cloud Storage Backups

When customers report staggering data usage during a month, cloud storage backup software is often the culprit. If you are new to cloud storage backup services like Dropbox or Carbonite, your PC may be uploading a significant part of your hard drive to create a full backup of your computer. This alone can consume terabytes of data. Fortunately, most backup services throttle uploads and do not automatically assume you need to backup your entire hard drive. Many offer options to limit upload speed, the total amount of data that can be uploaded each month, and options to selectively backup certain files and folders. 

Your Wi-Fi Network is Insecure

In areas where data caps are pervasive, those who want to use a lot more data and do not want to pay for it may quietly hop on your home Wi-Fi network and effectively bill that usage to you. This is most common in large multi-dwelling units where lots of neighbors are within range of your home Wi-Fi. The best way to reduce the risk of a Wi-Fi intrusion is to create a password that is exceptionally difficult to guess, using a mixture of special characters (!, ^, %, etc.) and mixed case random letters and numbers. Although this can be inconvenient for guests, it will probably keep intruders out and prevent them from running up your bill.

It is unfortunate customers have to jump through these kinds of hoops and compromise their online experience. But where cable and phone companies lack competition, they can charge a small fortune for internet access and still feel it is appropriate to cap usage and ask for even more money when customers “use too much.”

AT&T/WarnerMedia’s new streaming service due to debut in Spring 2020 will be called HBO Max and bundle original and classic content from AT&T-owned networks and studios, including Warner Bros., New Line, DC Entertainment, CNN, TNT, TBS, truTV, CW, Turner Classic Movies, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth, and Looney Tunes.

AT&T still has not announced pricing for the service, but most expect it will end up costing around $16 a month, more than any other streaming service.

“HBO Max will bring together the diverse riches of WarnerMedia to create programming and user experiences not seen before in a streaming platform,” Bob Greenblatt, chairman of WarnerMedia Entertainment and direct-to-consumer, said in a statement.

To attract potential subscribers, AT&T has been pulling back content it owns or controls from other streaming services. In addition to The Office, AT&T announced it will also yank Friends reruns off of Netflix in early 2020, despite collecting $80 million from the streaming giant this year to carry the NBC series that aired its last episode in 2004.

To market HBO Max, WarnerMedia will tie it to the marquee HBO brand and its HBO Max and Go streaming services. HBO Max customers will receive access to the full HBO online catalog of on-demand content, along with more than a dozen new made-for-streaming TV shows and movies. Much of the new content will target a younger audience, including a large roster of CW shows, original movies and shows. But older audiences will also find a large library of classic content from the enormous Turner Classic Movies and Warner Bros. studio libraries.

A preview for HBO Max, WarnerMedia’s new streaming service, debuting in Spring 2020. (0:43)

As some Netflix shareholders grumble about the company’s massive investment in developing original content, some of Netflix’s smaller rivals claim the streaming service cannot forever depend on subscription fees alone to cover the billions being spent on new series and movies.

NBCUniversal’s Linda Yaccarino and Hulu’s Peter Naylor both believe Netflix will eventually have to begin inserting advertising into shows if it wishes to continue its spending spree on content while avoiding steep rate increases.

At a Cannes Lions panel held last week, content companies discussed the evolution of streaming services and their embrace of traditional advertising.

“When you have to make more programming that’s not guaranteed to be a hit, you have to spend more money, you have to build your brand, you have to help the consumer discover your stuff — the price will go up for the subscription, and it would be logical to mitigate those increases to take ads,” Yaccarino said.

Hulu remains the biggest and best-known example of a streaming service built on a traditional advertising model. Customers pay $5.99 a month for advertiser-sponsored content, similar to traditional linear television. Customers can buy their way out of advertising interruptions by paying $11.99 a month for a commercial-free plan that is roughly double the usual price. Just under 30% of Hulu subscribers currently select the commercial-free option.

Hulu’s bathroom break ad, displayed when a video is paused.

Naylor claims traditional advertising need not continue to resemble commercial broadcast television, despite the fact Hulu is still mimicking that experience.

“The future of ad-supported media does not resemble what we’re doing today in terms of ad load or even ad shape,” Naylor said. “It can be interactive advertising or nonintrusive advertising. I think you’re going to see a lot of innovation from all of these new OTT providers because we’re allowed to. We’re not married to the clock. Fifteen and 30-second ads were a product of linear TV. When everything’s on demand and served through an IP address, the ad experience is going to dramatically improve.”

Hulu has been experimenting with different ad formats to gauge subscriber acceptance. Interactive advertising, viewer-selected ads, and banner ads that appear when programming is paused are all being tested. A 2 feet by 6 feet banner is perfect for making a big impression.

Although Hulu is dabbling in original content, NBCUniversal spent more than $28 billion on content acquisition and development last year. In contrast, Netflix spent $12 billion. Yaccarino said that as more streaming services launch, particularly those from Disney and WarnerMedia, Netflix will have to further increase its spending to keep up.

A Netflix spokesperson told CNBC all this talk was “wishful thinking from an advertising conference.” Netflix is not currently focused on incorporating ads into any of its shows, the spokesperson confirmed.

WarnerMedia’s forthcoming streaming service will showcase HBO and Cinemax at the heart of a one-size-fits-all streaming package priced at $16-17 a month, featuring premium movies and Warner Bros. vast movie and TV show collection. We wanted to enjoy those streams. Find out more about what makes a stunning home theater from this website.

AT&T plans to begin beta testing of the service later this year, with plans to sell the service to consumers as early as March 2020, according to the Wall Street Journal.

John Donovan, CEO of AT&T Communications, signaled AT&T’s “radical reshape” of television on a Credit Suisse Communications conference call event on Wednesday.

“The streaming strategy, whether you call it an OTT or IPTV or thin client, we’re going to transform our product,” Donovan said. “It is the consumer product I am most excited about since the iPhone. It radically reshapes what your concept of television is.”

The “new concept” is a radical departure from AT&T’s earlier plan to offer “good,” “better,” and “best” price points, varying the amount of content depending on how much subscribers were willing to pay. Instead, Donovan proposes one price point for every subscriber, with access to an unprecedented amount of content produced by one of the country’s largest Hollywood studios. Warner Bros. has produced thousands of movies and series since the early days of television in the 1950s and the advent of commercial filmmaking in the early 20th century.

Donovan

“The idea of three tiers never made much sense and is too complicated to fly in the marketplace,” analyst Craig Moffett of MoffettNathanson told the newspaper.

Despite the potential of an enormous library of streamed content, consumers may balk at WarnerMedia’s asking price, especially if they have no interest in HBO or Cinemax. Netflix’s most popular two-stream plan costs $12.99 a month and second place Hulu is available for $5.99 a month with ads or $11.99 a month without. Most niche streaming services like MHz Choice, CBS All Access, Acorn Media, BritBox, and other similar services are all under $10 a month. AT&T proposes to set its price higher than traditional premium movie network services like HBO, which usually costs $14.99, to protect the relationships and revenue it earns from cable, satellite, and telco TV providers. But AT&T’s new service may be a tough sell, especially considering forthcoming streaming services like Disney+ plans to launch Nov. 12 at $6.99 a month, and Viacom’s Pluto TV and Sinclair’s STIRR are ad-supported and free. In fact, most of the newly announced streaming services yet to launch are targeting much lower price points, fearing consumers may be nearing their budget limits for more content.

AT&T warns it may adjust pricing before the service launches next year, and there may eventually be a cheaper, ad-supported version, making the service comparable to Hulu. AT&T has also not disclosed how much original made-for-streaming programming it plans to include in the venture, which may be an important consideration to attract price-sensitive customers not interested in watching repeats and movies they can watch elsewhere. Consumers may also be overwhelmed and fatigued by the amount of content already available to watch through established players like Netflix and Hulu, so WarnerMedia may find their streaming service a difficult sell, especially as cord-cutters find prices for streaming live TV services already rising as fast as their old cable TV subscriptions.