twice connect
careers

Growth Expected For DBS

7/23/2001 02:00:00 AM Eastern

Few successful business stories show more vision-turned-reality than the past seven years of growth by the U.S. DBS industry.

What began on Dec. 17, 1993, with the launch from French Guiana of the first DirecTV satellite, DBS-1, has today grown to the point where there is one DBS household out of every 6.7 U.S. television homes.

Put another way, of the 102 million U.S. homes existing today, more than 15 million receive their signals via high-powered satellites. Add to this another one million receiving low-powered TV signals via C-Band, and one out of every 6.4 U.S. homes today have satellite access.

Comparatively, the U.S. cable TV market, which has had much more time to evolve, reaches one out of every 1.5 homes.

Along the way the degree of DBS industry consolidation has been startling. What began as several rounds of licensing by the Federal Communications Commission (FCC), dating back to 1981, ultimately produced 31 licensees and six actual system operators.

From these six (which included, in order of launch, PrimeStar, DirecTV, U.S. Satellite Broadcasting, EchoStar, AlphaStar and Dominion Video Services), we are today down to three, i.e., DirecTV, EchoStar and Bob Johnson's Naples, FL-based Dominion Video Services, which operates via a special arrangement with EchoStar.

The future suggests even further consolidation, with the apparently imminent sale of the GM's Hughes Electronics division including DirecTV to either Rupert Murdoch's News Corp. or to Charlie Ergen's EchoStar.

There are a lot of additional opportunities ahead in the DBS marketplace for consumer electronics dealers. According to The Carmel Group's "hot" scenario, almost one of every three U.S. homes will become a DBS household by year-end 2006.

This will be a monumental benchmark, since it means the DBS industry will have acquired more than half of all cable subscribers in under half the time it took cable to accomplish the same numbers.

This means we can expect sales of another 12 million or more additional sets of DBS boxes, remotes, dishes, wiring and ancillary products to new subscribers. We can also expect old DBS units in current DBS homes to get moved to the back bedroom or kitchen, as tens of millions of new Ultimate TV, AOL TV, TiVo and EchoStar units are purchased by subscribers as replacements.

The CE revenue opportunities – especially for the new units that include Advanced Interactive Multimedia (AIM) services — remain in the billions of dollars.

Still, the DBS industry has its challenges, including the following:

  • Increased competition from the telecommunications, media and computer industries, lead by cable, but also including telephony, wireless cable and other, yet-to-be developed technologies;

  • Market saturation;

  • Growing subscriber acquisition costs (SAC);

  • Growing churn;

  • Local channel "must-carry" mandates that stand a solid chance of being upheld by U.S. courts and regulators;

  • New taxation at the state and local levels;

  • Slow acceptance of interactive TV, broadband, streaming media, and personal video recorders (PVRs).

The degree to which the existing and future U.S. players can address these concerns will dictate the degree to which the U.S. DBS industry will actually achieve the predicted additional growth levels.

Yet the industry has already managed to overcome a number of hurdles to get to where it is today.

These included:

  • Launch delays;

  • Rain fade;

  • The high costs of hardware;

  • Overly inflated subscriber projections (by system operators);

  • Lack of local network signals via satellite;

  • Ever growing SAC;

  • Inflated churn;

  • Customer service problems;

  • Inherent consumer apathy and resistance to change;

  • Access to additional set-tops;

  • Limited bandwidth;

  • And competition from cable.

In the end, the key reason DBS in the U.S. has prevailed is because of an additional set of dynamics, which primarily quality service, more choice, and rapid price declines. Other reasons for DBS's U.S success include competition between the six players mentioned above, competition between DBS and cable in the U.S. marketplace (and globally), specialized content, electronic program guides, solid retail distribution channels, ease of and choice of use and installation, and superior nationwide service and marketing.

And in the end, much of what has gotten DBS this far will continue to propel it in the future. Moreover, incentivized, and thus particularly motivated, CE distributors will deliver much of that.







PHOTOS
Nationwide PrimeTime 2014

Scenes from Nationwide PrimeTime buy fair held in

ProSource Meeting Filled With Optimism

San Antonio — Optimism reigned at ProSource’s

Ingram Draws 500 To Spring Vendor Expo

Scottsdale, Ariz. — Ingram Micro Consumer

CEA Holds ’14 Digital Patriots Dinner

Washington — CEA held its annual Digital Patriots’

8 Technology Accessories For a Greener Earth

An Earth Day review of Earth-friendly products, by

BrandSource Shows Diverse Product Selection

BrandSource’s Summit show at the Marriott World