Streaming TV Prices Are Marching Higher

The online-only television bundles that have lured away cable-TV customers with rock-bottom prices might not stay that low for long, according to The Wall Street Journal.

AT&T Inc.’s DirecTV Now streaming service recently raised its basic channel plan by $5 over the summer, bringing its starting monthly cost to $40. Chief Executive Randall Stephenson this week said the company is considering additional price increases for the service.

Wall Street Journal Graphic

“We moved the price up and, being a very price-sensitive market, we fully expected to see a considerable number of customers drop off,” Mr. Stephenson said in an interview Wednesday. “We haven’t seen that. The consumers, it’s obvious that they’re finding value in the platform.”

Streaming services like DirecTV Now, Sling TV, PlayStation Vue and YouTube TV added millions of customers last year by promising big savings over traditional cable and satellite-TV subscriptions. Sling sold its channel package for $20.

DirecTV Now’s basic price is “for the long haul probably still too low,” Mr. Stephenson said. He said the service has been unprofitable, and the company wants to steer the most frugal customers to its slimmer WatchTV service, which carries no sports channels and is profitable.

Mr. Stephenson said WatchTV could offer a range of packages from $15 to $25 a month to appeal to more people. “We’ll exit this year with a very different looking portfolio,” he said.

Market leader SlingTV this summer raised the price of its basic package by $5 to $25 a month, with its owner Dish Network Inc. blaming higher channel programming fees.

Alphabet Inc.’s YouTube TV service, which carries cable channels and went live last year at $35 a month, raised its monthly price to $40 earlier this year after it tacked on additional channels like TNT and TBS.

The higher prices have also narrowed the value gap between new and traditional TV, since cord-cutters must still pay for broadband service. Cable-TV packages still cost more than their online imitators, though cable companies often charge higher rates for standalone broadband service as an enticement to bundle internet and video.