Along with luring cord cutters and cord nevers, AT&T's DirecTV Now over-the-top service also is helping it snag customers from rival MVPDs, which make up about half its customer base, Chief Financial Officer John Stephens told investors Tuesday. AT&T said DirecTV Now subscribers surpassed 1 million. The company is beta testing its second-generation platform that will include a cloud DVR and 4K capabilities, pay-per-view events and movies, digital advertising inserts and data insight capabilities, Stephens said. He said DirecTV Now profitability "will get up into very acceptable levels," and though it isn't the same fat profit margin opportunity the traditional linear TV business was, it requires much lower capital expenditures. On FirstNet, any states that don't make a choice automatically will be opted in when the opt-in window closes this month, and many states may go that route, he said. He said the work orders to build the FirstNet network over the next five years will start to be issued in January, with the engineering work already complete. He said FirstNet is "a very good revenue opportunity for us," with the potential of new products and services targeting markets like first responders and smart city initiatives, targeting perhaps 10 million users. Stephens said the company expects to finish this year with 7 million homes passed with fiber, and instead of an earlier prediction of 12.5 million by mid-2019, it's on track to pass more than 14 million homes with fiber by then. Stephens said customers should see "no change" from a rollback of Communications Act Title II regulation of ISPs, with the company continuing its policies of no blocking or advantaging some websites over others. House Communications Subcommittee ranking member Mike Doyle,​ D-Pa., and Chairman Ajit Pai were at odds Tuesday about the likely ramifications of Pai's net neutrality proposal (see 1712050057). Clarity on net neutrality "will bring back an opportunity for more investment," Stephens said. He said the company "look[s] forward to trial" and prevailing in the DOJ lawsuit seeking to block its buy of Time Warner (see 1711200064).

Redbox's sales of Disney codes to allow streaming of movies that clearly are marked not for sale or transfer, both online and at its kiosks, are a copyright violation, interference with Disney contracts with customers, and violations of California's false advertising and unfair competition laws, Disney said in a docket 17-cv-8655 lawsuit (in Pacer) filed Thursday in Los Angeles. Redbox said Friday it "feel[s] very confident in our pro-consumer position."

More than half of U.S. households subscribing to over-the-top video services pay for more than one service, Parks reported Thursday. Of the households with multiple subscriptions, 81 percent use Netflix plus another service, typically Amazon or Hulu, and the average number of subscriptions per household is rising, said analyst Brett Sappington. “Video services do not necessarily have to displace a Netflix” or another heavyweight service to gain market share, Sappington said. “Services can potentially find success as a complementary offering." Sappington said consumers who pay for OTT services are more likely than nonsubscribers to watch free online video services, and the more OTT video subscriptions consumers have, the more likely they are to use free or “freemium” video services that offer different service tiers. Some 30 percent of households with one subscription service use at least one free, ad-supported online video service. The ratio jumps to 47 percent for households subscribing to three premium services and to 63 percent for households subscribing to five or more services.

Pay-TV subscribers increasingly are getting at subscribed content via connected TVs, opting to be self-aggregators rather than go through pay-TV operator aggregation, nScreenMedia said Wednesday. Use of streaming media players is coming at the expense of mobile devices and PCs, it said, saying "a small but significant group" of pay-TV watchers is avoiding operator-provided set-top boxes altogether for programmer and operator TV Everywhere apps on connected TV platforms.

U.S. households with live multichannel pay-TV service likely will drop from 85 percent today to 79 percent by 2030, The Diffusion Group said Wednesday. By then, roughly 30 million U.S. households will be without any such service, TDG said. It expects legacy MVPDs to be hard by subscriber losses due to industry trends and to increased competition from virtual pay-TV providers, with legacy subscription-video penetration dropping from 81 percent of U.S. households today to 60 percent. Virtual pay-TV penetration will grow from 4 percent to 14 percent, TDG said.

MGM's Epix will be available via Comcast's X1 platform early next year under a distribution agreement they announced Tuesday.

YouTube is addressing video content that tries to pass as family friendly "but clearly is not," including tougher application of its community guidelines and using machine learning technology and automated tools to more quickly find video needing human review, Vice President-Product Management Johanna Wright blogged Wednesday. She said in the past week it terminated more than 50 channels and removed thousands of videos that were deemed endangering to children. She said since the company in June announced it would remove ads from content depicting family entertainment characters engaged in violent, offensive or otherwise inappropriate behavior, it has removed 3 million videos and ads from another 500,000 videos. She said starting last week it will turn off all comments on videos of minors where it sees inappropriate sexual or predatory comments. And she said YouTube created a platform for family-friendly content -- YouTube Kids -- and plans to put out a guide on how creators can make family content for the app.

Instead of classic channel-based inertia -- watching a channel unless something causes a switch -- video viewers today increasingly have platform, app and binging-based inertia, The Diffusion Group (TDG) Senior Adviser Joel Espelien blogged Tuesday. Those together constitute screen-based viewer inertia, separate from traditional time-based inertia, TDG said. Despite a proliferation of video platforms, viewers switch among platforms and services less frequently than might be expected, still gravitating toward a favorite for much of their viewing.

Time's over-the-top Sports Illustrated TV streaming network debuts Thursday on Amazon Channels, it said Wednesday. It said the network will debut with 130 hours of on-demand programming and follows People TV. Subscription is $4.99 monthly for Amazon Prime's U.S. members.

The largest pay-TV providers lost about 405,000 net video subscribers in Q3, up from the 205,000 lost in the year-ago period, Leichtman Research Group said Wednesday. LRG said the top six cable companies lost about 290,000, up from 90,000. Direct broadcast satellite operators lost about 475,000, compared with a gain of 5,000, their deepest losses in a quarter, it said. The largest telcos lost about 180,000, compared with a loss of 370,000. Over-the-top services Sling TV and DirecTV Now added about 535,000, up from 200,000 net adds, the researcher reported.