Why it matters: AT&T continues to bleed subscribers. To remedy that, the company is coming out with a new streaming service (and set-top box) that will likely supplant the DirecTV satellite business. With all of the streaming competition out there, AT&T will need to prove that its content is worth its higher prices.
During AT&T's second quarter earnings report, the company revealed that a new streaming service is in the works. AT&T didn't offer any specifics but did mention that promised that the new service, called AT&T TV, would begin trials in the third quarter.
Another tidbit of info from the report is that AT&T TV would specifically be a "thin client" streaming service. This thin client is likely the "AT&T/DirecTV Wireless 4K OTT Client" Android-powered set-top box that was reported on back in 2017. This box will also feature a remote with voice activation features, presumably using the Google Assistant or even Amazon Alexa.
This would be AT&T's fourth streaming service in addition to DirecTV Now, WatchTV, and HBO Max. According to AT&T's president of Mobility and Entertainment, David Christopher, this will likely be a DirecTV service that would directly replace the satellite-based service of the same name. The streaming box would allow customers to get DirecTV without having to install a satellite or install an app on their phone.
However, the problem with rolling out a new streaming service is that AT&T is still losing subscribers of both its postpaid DirecTV satellite service and the streaming-only DirecTV Now. The company posted a 778,000 net loss of "premium TV" subscribers and a 168,000 net loss of DirecTV Now subscribers. The loss of subscribers combined with rising prices doesn't paint a pretty picture.
Ever since it's acquisition of Time Warner, AT&T has been trying to deliver premium and original content while also trying appeal to different demographics. It knows people want to cut the cord so there's DirecTV Now and HBO Max. It also knows people like their traditional cable service, hence the upcoming streaming replacement to DirecTV. AT&T also wants to cater to their wireless customers by bundling their streaming services with their wireless service (with no hit to their data cap due to zero rating).
In any case, AT&T needs to do something attract subscribers to stop the hemorrhaging. Rising prices means that they're going to need content that will be worth it over competing streaming services.