Post by dkennedy on Jan 23, 2006 6:42:41 GMT -5
DirecTV’s New Lease on Life
January 23, 2006
By Linda Moss, Multichannel News
Adopting a strategy used by cable operators, DirecTV Inc. in March will begin leasing its set-top boxes and digital-video recorders to its customers instead of selling them.
The nation’s largest direct-broadcast satellite provider, with 15 million subscribers, notified its retailers this month that it was migrating to a lease program effective March 1.
Those dealers were told that they would only be paid commissions for leasing DirecTV’s hardware to customers, not selling those receivers.
The change in strategy is aimed at ultimately helping to drive the rollout of advanced services like HDTV and interactive, which offer new revenue streams.
“Most of our multichannel competitors use this model,” senior vice president of sales and distribution Jim Arnold said. “It’s our version of it, and we think it’s very competitive with what they do.”
In a way, DirecTV’s move toward leasing and not selling its set-tops to consumers is ironic. Cable’s long-standing modus operandi has been to lease its hardware to subscribers.
On the flip side, cable operators -- long mindful of DBS’ big presence in consumer-electronics stores -- at times have tested selling, rather than leasing, set-tops.
DirecTV currently substantially subsidizes the cost of its set-tops to retailers. The DBS provider also pays retailers a commission on the DirecTV-programming subscriptions they sell to consumers.
Initially, the switch to leasing won’t impact consumers too much. For example, right now, subscribers with basic $39.99-per-month service already get their first standard receiver free-of-charge.
And a current promotion for the “DirecTV Plus” DVR won’t change. Subscribers will have to pay $99 for it, but they can mail in a $100 rebate form.
With leasing, a customer will pay $5.99 per month for digital recording service, get a standard set-top free-of-charge and pay $4.99 to lease a second receiver that includes a DVR.
January 23, 2006
By Linda Moss, Multichannel News
Adopting a strategy used by cable operators, DirecTV Inc. in March will begin leasing its set-top boxes and digital-video recorders to its customers instead of selling them.
The nation’s largest direct-broadcast satellite provider, with 15 million subscribers, notified its retailers this month that it was migrating to a lease program effective March 1.
Those dealers were told that they would only be paid commissions for leasing DirecTV’s hardware to customers, not selling those receivers.
The change in strategy is aimed at ultimately helping to drive the rollout of advanced services like HDTV and interactive, which offer new revenue streams.
“Most of our multichannel competitors use this model,” senior vice president of sales and distribution Jim Arnold said. “It’s our version of it, and we think it’s very competitive with what they do.”
In a way, DirecTV’s move toward leasing and not selling its set-tops to consumers is ironic. Cable’s long-standing modus operandi has been to lease its hardware to subscribers.
On the flip side, cable operators -- long mindful of DBS’ big presence in consumer-electronics stores -- at times have tested selling, rather than leasing, set-tops.
DirecTV currently substantially subsidizes the cost of its set-tops to retailers. The DBS provider also pays retailers a commission on the DirecTV-programming subscriptions they sell to consumers.
Initially, the switch to leasing won’t impact consumers too much. For example, right now, subscribers with basic $39.99-per-month service already get their first standard receiver free-of-charge.
And a current promotion for the “DirecTV Plus” DVR won’t change. Subscribers will have to pay $99 for it, but they can mail in a $100 rebate form.
With leasing, a customer will pay $5.99 per month for digital recording service, get a standard set-top free-of-charge and pay $4.99 to lease a second receiver that includes a DVR.