(Bloomberg) -- AT&T Inc.’s online streaming TV service, DirecTV Now, will become the company’s primary video platform in three to five years, according to people familiar with the plans.
The largest U.S. pay-TV provider has been working for more than a year to build a video-delivery system that can carry multiple live feeds to broadband-connected homes, said the people. Such a platform would eliminate the need for a cable hookup or satellite dish in five years or less, the people said.
DirecTV Now, set to be introduced by the end of this year, will try to appeal to a national audience of so-called cord-nevers -- some 20 million households that have no cable or satellite service -- with 100-plus channels and a choice of streaming to one or two devices simultaneously.
“This is exclusively an over-the-top product,” Chief Executive Officer Randall Stephenson said at the Goldman Sachs Communacopia conference in New York Wednesday. “This is no set-top box; this is no truck roll; this is a customer pulling down an app, getting a very robust platform.”
AT&T has been looking for ways to respond to online-only TV competitors like Netflix Inc. and Amazon.com Inc., which have been luring its customers away with lower-priced alternatives. AT&T acquired satellite-TV operator DirecTV for $48.5 billion last year, and so far in 2016 it’s lost more than 100,000 TV customers.
Initially, DirecTV Now will be aimed at budget-minded consumers, and will stream free for AT&T wireless subscribers. The price of the service has yet to be finalized. If AT&T can get customers to sign up online on their own, it will reduce customer service costs and allow the company to offer the service at a price competitive with Sony Corp., said the people, who asked not to be identified discussing non-public information. Sony’s PlayStation Vue starts at $39.99 for 60 channels and runs as high as $54.99 for more than 100 channels.
DirecTV Now will also compete directly with other web-streaming services like Dish Network Corp.’s Sling TV, which starts at $20 for the 28-channel base price and runs as high as $40 for a 48-channel multi-screen package.
The company said earlier this week that it had reached programming agreements with 90 percent of its content partners. That process has included conventional TV and online-streaming rights deals like one reached Thursday with Scripps Networks Interactive, which includes the Travel Channel, Food Network and the Cooking Channel, according to a statement.
While DirecTV Now could siphon subscribers away from the satellite-TV service, the two-stream limit may not appeal to bigger-spending viewers with multiple TVs, tablets and phones. Depending on DirecTV Now’s success, AT&T could expand the service to include as many as 10 streams offering the kind of full-package that could replace conventional pay-TV.
Eric Ryan, an AT&T spokesman, declined to comment.