DirecTV Now helped AT&T turn around its shrinking video business

Time Warner could give it the shows it needs to keep thriving.

It's been clear for a while that DirecTV Now is keeping AT&T's TV subscriber numbers in the black, but it's now apparent just how much it's turning around its once-ailing video services. The telecom has posted second quarter earnings revealing that DirecTV Now added 342,000 subscribers in the spring, turning last year's 199,000-subscriber loss for AT&T's Entertainment Group into an 80,000-user gain. The telecom isn't shy about what that means -- its video customer base was "stable" thanks to internet viewership.

The growth helped DirecTV Now reach 1.8 million total customers -- about a million more than it had at the end of summer 2017. AT&T only just launched its low-cost WatchTV service at the very tail end of the quarter, so it didn't have enough time to provide a meaningful result.

Internet viewers still represent a small chunk of AT&T's 25.5 million total TV customers. However, the gradual shift toward streaming helps explain why the carrier acquired Time Warner. While it didn't need to buy the broadcasting giant to offer channels like HBO on its streaming services, this helps it make that move while keeping costs in check. This could help it fend off rival services like Sling TV and YouTube TV by offering premium channels at alluring prices, not to mention give you a better reason to spring for live TV instead of sticking to on-demand services like Netflix or Prime Video.