DirecTV Now Streaming Service Will Have Some Limits

DirecTV Now, the-satellite TV-without-a-dish streaming service that's slated to launch later this year, holds a lot of promise for consumers. But newly released details could dull the appeal, at least for some.

The service is DirectTV's proposed internet-delivered pay TV alternative that would essentially give consumers the option of getting much of the company's programming without the cost or complexity of the usual equipment, which includes a satellite dish mounted on the roof.

At a recent investor conference, Randall Stephenson, CEO of AT&T—which owns DirecTV—indicated that customers will be limited to just one or two simultaneous streams. And that could be a deal-breaker for many homes with multiple users. (Consumer Reports listened to a recorded webcast of the event.)

There's another potential issue for those who'll be using cellular data to stream to a smartphone or tablet. The data you'll need for streaming on your mobile device is built into the price of the plan, but only if you get service from AT&T, Stephenson disclosed at the conference. If you get your mobile service from another provider, you'll likely burn up a lot of data when you stream videos. That can quickly create problems for people with data caps or limited-data plans.

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"Zero-rating" plans like this, which exempt a company's own data from caps or surcharges, have come under fire for violating the spirit of net neutrality.

When asked to explain in more detail about the stream limitations, an AT&T spokesperson declined to comment, saying that Stephenson's remarks can "stand on their own until we make further announcements."

When DirectTV Now was announced earlier this spring, Stephenson called it "a game changer," saying that it would appeal to the estimated 20 million households that don't currently pay for TV service. During a recent Goldman Sachs investor conference, Stephenson confirmed that DirecTV Now would launch in the fourth quarter, saying, "we're 90 percent there” on nailing down content deals. “There are a couple of holdouts we’re trying to grind through and work through.”

DirecTV has said its goal is to have 100 channels at launch. The list now includes some heavyweights, including ABC/Disney, Discovery Communications, A&E, HBO, NBC Universal, Viacom, and Turner. Another possibility is offering the satellite company's popular DirecTV's NFL Sunday Ticket as part of the streaming subscription.

So far, AT&T hasn't revealed how much the streaming service will cost, though Stephenson did promise a “very, very aggressive price.” One reason it can afford narrower margins, he said, is that unlike like traditional pay TV, there are no set top boxes to manufacture, no in-home installation and service costs, and online billing.

Another advantage is that AT&T can leverage its existing relationships with content companies for streaming rights. The company has the largest pay TV subscriber base in the U.S., with about 25 million customers.

When asked during a follow-up question-and-answer period during the conference if DirecTV Now might cannibalize some of the company’s higher-priced traditional pay-TV business, Stephenson acknowledged it might.

“But that’s a good sign,” he said. “It means you have found something the market really wants.”