Satellite TV Leader Rolls Out Local HD Channels, New DVR Solution
Despite slowing overall growth in recent quarters, DirecTV is mounting a new frontal assault on the cable industry by substantially beefing up its high-definition TV (HDTV), digital video recorder (DVR) and video-on-demand (VOD) offerings.
With HDTV sets now in an estimated 12 million to 15 million U.S. homes, DirecTV is particularly stepping up its commitment to HD. Trailing behind many major MSOs in its HDTV signup rate, DirecTV closed the third quarter with only about 600,000 to 650,000 of its 15 million-plus subscribers paying for HD service, according to estimates by Leichtman Research Group. In its second quarter earnings report over the summer, the satellite TV provider said a mere 4% of its new subscribers opted for HD service.
Seeking to reclaim the high-tech mantle from cable, DirecTV began carrying the HDTV signals of local broadcast stations in several major markets during the fall. After introducing local HD channels in the Detroit area in October, the satellite TV leader expanded its rollout to four more markets in November, adding Atlanta, Chicago, Philadelphia and San Francisco to the growing list. It then reportedly added at least another five markets last month, including Boston, Dallas, Houston, Tampa and Washington, D.C.
With those 10 metro areas already covered, DirecTV intends to beam local HD channels to at least two dozen more major markets over the next three months. By the spring, the DBS provider aims to deliver local HD broadcast signals in 36 markets, encompassing 57% of U.S. TV households.
The expanded rollout comes after DirecTV successfully launched its second, next-generation Spaceway satellite on Nov. 16. Along with the company's existing Spaceway F1 bird, the high-powered Spaceway F2 satellite will enable DirecTV to beam the HD signals of up to 500 local broadcast stations to subscribers in the initial 36 markets. Plans call for launching another two Spaceway satellites in 2007, allowing the company to offer more than 1,500 local and 150 national HD channels to its subscribers.
Previously, DirecTV offered its subscribers a package of six HD cable networks for an extra $10.99 a month. It also offered the HD signals of local stations owned and operated by the major broadcast networks as part of its Total Choice programming package, as well as several HD premium services.
Cable operators, however, still have a window of opportunity to take advantage of their current edge in HDTV because DirecTV's ambitious plans are largely dependent upon its switch from MPEG-2 set-top boxes to more advanced MPEG-4 set-tops. The company is looking to convert its set-tops over to MPEG-4 over the next couple of years so that it can decode and encode digital video signals more efficiently, squeezing far more channels into the same spectrum. But the daunting conversion process will require DirecTV to switch out or upgrade millions of customer set-tops so that the boxes speak the language of the new video codec.
In particular, this massive swap-out of digital satellite receivers will test DirecTV's deployment and installation infrastructure. What's more, it will highlight the company's longstanding product obsolescence issues with its heavily subsidized customer equipment.
One wildcard to consider is that most HDTV homes have not yet signed up for HD subscription service from either a cable operator or a DBS provider. In fact, Kagan Research projected that no more than 30.1% of all DBS homes with HDTV-enabled sets would have HD set-tops and programming subscriptions by the end of 2005. Similarly, Kagan projected that no more than 31.4% of cable households with DTV sets would have HD set-tops and programming subscriptions at the close of 2005.
Getting more aggressive on the DVR front as well, DirecTV has started moving away from its previously exclusive reliance on TiVo. Instead of just selling TiVo-enabled satellite receivers to its subscribers, the DBS provider began rolling out a new DVR solution to thousands of retail stores in November.
The new DVR, known as DirecTV Plus, features well over 100 hours of recording capacity, interactive functionality, one-touch recording, picture-in-guide and bookmarks for viewers to mark their favorite scenes in recorded programs and then jump right to them. It also features DirecTV's new video-on-demand (VOD) service, which just launched as well.
The spanking new DVR is a critical part of DirecTV's drive to trim its expenses while fostering continued steady growth. By switching to its own offering, DirecTV is aiming to save more than $1 a month in revenue-sharing fees on each new DVR customer that it signs up. The company is offering $100 mail-in rebates on the new digital recorders, which cost $99 for new DirecTV customers and $148 for existing subscribers.
DirecTV now boasts about 2.7 million TiVo subscribers, thanks to aggressive promotions with its former DVR partner in the past. In the third quarter, DirecTV netted 240,000 new DVR customers, with new satellite TV subscribers accounting for more than half of them.
Finally, in a landmark pact, DirecTV and NBC Universal struck a multi-year deal to deliver new episodes of NBC and related cable network prime-time shows on-demand to satellite TV subscribers for a nominal fee. DirecTV subscribers with the company's new DVR can order each program for 99 cents within hours after they first air. The pact covers six hit series -- NBC's "Law & Order: Special Victims Unit," "Law & Order: Criminal Intent," "Surface" and "The Office;" USA Network's "Monk;" and Sci Fi Channel's "Battlestar Gallactica."
Unlike regular TV viewers, DirecTV customers can watch the on-demand shows without commercials. The programs are available until the next week's episodes air. The agreement also covers Bravo, even though none of its series are being offered yet. DirecTV and NBC announced the deal in mid-November, just hours before CBS and Comcast unveiled a similar VOD arrangement for four CBS prime-time shows.
http://www.cabledatacomnews.com/jan06/jan06-5.html
Despite slowing overall growth in recent quarters, DirecTV is mounting a new frontal assault on the cable industry by substantially beefing up its high-definition TV (HDTV), digital video recorder (DVR) and video-on-demand (VOD) offerings.
With HDTV sets now in an estimated 12 million to 15 million U.S. homes, DirecTV is particularly stepping up its commitment to HD. Trailing behind many major MSOs in its HDTV signup rate, DirecTV closed the third quarter with only about 600,000 to 650,000 of its 15 million-plus subscribers paying for HD service, according to estimates by Leichtman Research Group. In its second quarter earnings report over the summer, the satellite TV provider said a mere 4% of its new subscribers opted for HD service.
Seeking to reclaim the high-tech mantle from cable, DirecTV began carrying the HDTV signals of local broadcast stations in several major markets during the fall. After introducing local HD channels in the Detroit area in October, the satellite TV leader expanded its rollout to four more markets in November, adding Atlanta, Chicago, Philadelphia and San Francisco to the growing list. It then reportedly added at least another five markets last month, including Boston, Dallas, Houston, Tampa and Washington, D.C.
With those 10 metro areas already covered, DirecTV intends to beam local HD channels to at least two dozen more major markets over the next three months. By the spring, the DBS provider aims to deliver local HD broadcast signals in 36 markets, encompassing 57% of U.S. TV households.
The expanded rollout comes after DirecTV successfully launched its second, next-generation Spaceway satellite on Nov. 16. Along with the company's existing Spaceway F1 bird, the high-powered Spaceway F2 satellite will enable DirecTV to beam the HD signals of up to 500 local broadcast stations to subscribers in the initial 36 markets. Plans call for launching another two Spaceway satellites in 2007, allowing the company to offer more than 1,500 local and 150 national HD channels to its subscribers.
Previously, DirecTV offered its subscribers a package of six HD cable networks for an extra $10.99 a month. It also offered the HD signals of local stations owned and operated by the major broadcast networks as part of its Total Choice programming package, as well as several HD premium services.
Cable operators, however, still have a window of opportunity to take advantage of their current edge in HDTV because DirecTV's ambitious plans are largely dependent upon its switch from MPEG-2 set-top boxes to more advanced MPEG-4 set-tops. The company is looking to convert its set-tops over to MPEG-4 over the next couple of years so that it can decode and encode digital video signals more efficiently, squeezing far more channels into the same spectrum. But the daunting conversion process will require DirecTV to switch out or upgrade millions of customer set-tops so that the boxes speak the language of the new video codec.
In particular, this massive swap-out of digital satellite receivers will test DirecTV's deployment and installation infrastructure. What's more, it will highlight the company's longstanding product obsolescence issues with its heavily subsidized customer equipment.
One wildcard to consider is that most HDTV homes have not yet signed up for HD subscription service from either a cable operator or a DBS provider. In fact, Kagan Research projected that no more than 30.1% of all DBS homes with HDTV-enabled sets would have HD set-tops and programming subscriptions by the end of 2005. Similarly, Kagan projected that no more than 31.4% of cable households with DTV sets would have HD set-tops and programming subscriptions at the close of 2005.
Getting more aggressive on the DVR front as well, DirecTV has started moving away from its previously exclusive reliance on TiVo. Instead of just selling TiVo-enabled satellite receivers to its subscribers, the DBS provider began rolling out a new DVR solution to thousands of retail stores in November.
The new DVR, known as DirecTV Plus, features well over 100 hours of recording capacity, interactive functionality, one-touch recording, picture-in-guide and bookmarks for viewers to mark their favorite scenes in recorded programs and then jump right to them. It also features DirecTV's new video-on-demand (VOD) service, which just launched as well.
The spanking new DVR is a critical part of DirecTV's drive to trim its expenses while fostering continued steady growth. By switching to its own offering, DirecTV is aiming to save more than $1 a month in revenue-sharing fees on each new DVR customer that it signs up. The company is offering $100 mail-in rebates on the new digital recorders, which cost $99 for new DirecTV customers and $148 for existing subscribers.
DirecTV now boasts about 2.7 million TiVo subscribers, thanks to aggressive promotions with its former DVR partner in the past. In the third quarter, DirecTV netted 240,000 new DVR customers, with new satellite TV subscribers accounting for more than half of them.
Finally, in a landmark pact, DirecTV and NBC Universal struck a multi-year deal to deliver new episodes of NBC and related cable network prime-time shows on-demand to satellite TV subscribers for a nominal fee. DirecTV subscribers with the company's new DVR can order each program for 99 cents within hours after they first air. The pact covers six hit series -- NBC's "Law & Order: Special Victims Unit," "Law & Order: Criminal Intent," "Surface" and "The Office;" USA Network's "Monk;" and Sci Fi Channel's "Battlestar Gallactica."
Unlike regular TV viewers, DirecTV customers can watch the on-demand shows without commercials. The programs are available until the next week's episodes air. The agreement also covers Bravo, even though none of its series are being offered yet. DirecTV and NBC announced the deal in mid-November, just hours before CBS and Comcast unveiled a similar VOD arrangement for four CBS prime-time shows.
http://www.cabledatacomnews.com/jan06/jan06-5.html
