DirecTV Plots Its Future With ESPN, Streaming Bundles

View of DirecTV broadcast satellite service provider logo at its headquarters in Caracas on May 19, 2020. US telecommunications giant AT&T announced on Tuesday its “immediate” withdrawal from the pay television market in Venezuela, where it offered the DirecTV satellite platform, due to the impossibility of complying with the legal requirements of both countries. (Photo by Federico PARRA / AFP) (Photo by FEDERICO PARRA/AFP via Getty Images)

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ESPN’s $29.99 per-month price point for its forthcoming streaming service was initially thought to be a shot across the bow for cable and satellite providers.

The price point was meant to attract existing ESPN subscribers to cut the cord, in exchange for ESPN’s full slate of programming via streaming. Other entertainment-focused services could potentially fill in the rest for those that wanted those options. ESPN, meanwhile, could just cut out the middlemen on the carriage fees it’s been collecting for decades.

In that case, the middlemen (MVPDs and vMVPDs) were about to get squeezed.

They still may, mind you. But DirecTV may have figured out a viable way to coexist with ESPN’s standalone streamer. At least for the time being.

DirecTV’s Direct Access To ESPN’s Streaming App

On Thursday, DirecTV announced that its subscribers across streaming, satellite and U-verse services would all be receiving access to ESPN’s direct-to-consumer app (dubbed “ESPN Unlimited” here) at no extra cost to their monthly bill.

The press release dubs it the “great rebundling,” as the cable/satellite provider once again finds a way to be the door to the entertainment options audiences are looking for. And all in one place, as it touts access via an all-in-one platform within the DirecTV interface.

While the ESPN piece of this alone is news, DirecTV also goes several steps further: Gemini (its unified streaming/satellite device) subscribers with a “signature package” tier will also get access to basic tiers of Disney+ and Hulu at no additional charge. And they hint that similar arrangements with HBO Max and Peacock are in the works for later this year as well.

A Hub study from May highlights that as much as 70% of consumers want centrally managed video bundles after years of a “wild west” a la carte approach that’s left audiences’ heads spinning (and increasingly emptied wallets). Smart TV OS interfaces and others like Roku, Apple and Amazon Fire TV interfaces all help with some of this, but not the singular unification of programming.

Here, DirecTV’s essentially solving the long-time bundling problem by becoming the skeleton key to many major streaming services (no Netflix or Paramount+ mentioned yet, however). But crucially, it’s not – at this time, at least – passing the cost of that convenience on to consumers.

It would seem that the death of satellite, DirecTV and MVPDs may have been greatly exaggerated.

The Future Ahead

There are still headwinds for traditional TV subscriptions, of course. But despite the 11% quarterly subscriber loss rate recently (via nScreenMedia), this is a complete rethinking of what an MVPD like DirecTV can be for consumers.

Granted, if their own internal data on minutes watched finds a limited amount of activity on the channels included with a DirecTV subscription, and most of the time spent with the integrated streaming apps, then perhaps this all changes.

In the short-term, though, this is a liferaft for DirecTV via a liferaft for overwhelmed consumers.

At a time when inflation is hitting every aspect of life and consumers are increasingly delaying non-essential purchases (recent Wunderkind research says 42% will wait longer to buy due to tariff-related price hikes), this is a long-overdue simplification. And one that could truly steady DirecTV’s business in a way that seemed less likely after the service lost rights to the residential NFL Sunday Ticket package.

As MVPDs have adjusted their sales pitch toward keeping older households from cord-cutting completely (versus attracting new households who are potentially “cord-nevers”), this is DirecTV’s best retention play.

The next question, now, is what happens when this becomes the norm for its competitors?

Realistically, Disney could’ve done something like this already (and still could) via Hulu + Live TV, and the same could be said of Comcast, Charter and others in the space. All already have some sort of streaming access integrated in. They’re just not on the same level of what DirecTV’s proposing here.

Will they ever get there? It is highly likely.

But if DirecTV can establish some real market leadership here and function as a great “rebundler” or streaming programming unifier, it could give them a significant edge as the streaming wars potentially give way to the bundle wars in the coming years.

During a stretch where the only thing TV has really been able to count on is more change, DirecTV’s bought itself some time via a true advantage here; and that’s a pretty valuable thing.