Post by dkennedy on Jan 23, 2006 8:45:39 GMT -5
Dish heaps on HD servings
New channels, new markets on the menu
January 23, 2006
By Joyzelle Davis, Rocky Mountain News
After waiting on the sidelines the past few years, EchoStar Communications' Dish Network has jumped into the high-definition programming market with the intention of taking the lead.
Douglas County-based EchoStar this month announced it will offer seven additional national HD channels on Feb. 1 as well as unroll local HD service in 50 markets by the end of the year. EchoStar claims its 25 total HD channels will give it the largest HD lineup among pay-TV providers; cable companies average 10 HD networks.
The addition of the local channels - which are slated to debut in Denver by mid-March - eliminates a longtime knock against the satellite provider. Cable rival Comcast, which has about 700,000 Colorado subscribers, has offered local HD channels since September 2003.
"Not being able to provide local channels was a big hurdle for Dish," especially when it came to broadcasts of sporting events, said Deepa Iyer, an analyst at consumer technology research firm Parks Associates. "So this is a big move."
Dish's announcement prompted Prudential analyst Katherine Styponias last week to upgrade EchoStar shares, saying that the new high-definition offerings "may make it easier to acquire the high-end customer that has historically gone to DirecTV."
Acquiring more high-definition customers is lucrative in part because they're likely to spend more, said Iyer, noting they pay for premium channels such as Starz Entertainment and HBO more often than regular subscribers.
EchoStar President Michael Neuman said that while affluent customers are likely to be the first to sign up for EchoStar's expanded high-definition offering, the company expects high definition to become a staple among middle-class customers as prices for HDTV sets continue to fall.
Consumers last year reported spending an average of $1,600 on HDTV sets, compared with $2,400 in 2004, according to a survey by -Leichtman Research Group. That helped boost HDTV penetration to about 12 percent of households, up from 7 percent in 2004, the report said.
"One of the largest television transitions that we'll ever see is taking place," said Neuman, who likened the adoption of high-definition television to the switch to color television from black-and-white sets. "As a multichannel distributor, you want to be ready for that."
Larger rival DirecTV, which has about 3 million more subscribers than Dish's 12 million, isn't sitting still, either. DirecTV plans to offer local channels in 36 markets by the end of March and 50 by year-end.
For both satellite providers, the addition of more HD channels is made possible by the move to next-generation MPEG4 compression technology, which allows for twice as many channels to be offered as previous MPEG2 technology. In order to shift to MPEG4, Dish and DirecTV are offering the new HD channels, including locals, only on new lines of receivers that require customers to upgrade to new models at additional cost.
The requirement means Dish's transition "isn't as simple or clear- cut as it seems" for existing subscribers, said Mark Kersey, president of BuyingHDTV.com. "There's likely going to be some resistance, and it's a little early to see how" DirecTV and Dish "are going to deal with it.
EchoStar is offering special lease deals, such as $49.99 for the ViP211 satellite HD receiver and $299 for the multiroom ViP622, to help ease the transition. Neuman, who declined to disclose EchoStar's existing number of HD subscribers, said relatively few people had actually purchased rather than leased the older HD receivers.
One opportunity Dish sees in the HD arena is the ability to add unique channels such as Voom. Most cable and satellite companies offer the same networks, which makes it "difficult to have a sustainable competitive advantage" based on content, Neuman said.
EchoStar last year obtained about a 20 percent stake in Rainbow Media's Voom - whose channels specialize in kung fu, animania and other niches - and agreed to carry the channels for 15 years. No other competitors offer Voom, although Rainbow Media has pitched other distributors, according to trade publication Multichannel News.
DirecTV has its own specialty offering with NFL Sunday Ticket, which gives the company exclusive rights to every NFL Sunday football game through 2010.
One of the greatest hurdles EchoStar and all other pay-TV providers face is convincing customers who own HDTVs that they need a specialized HD set-top box or receiver and, in the case of EchoStar, that they need to subscribe to a specialized HD programming package.
Nearly half of HDTV owners don't have special equipment to watch HD programming, according to a study by set-top box maker Scientific Atlanta. Many of those HDTV owners said they didn't get any special equipment because the picture was already a noticeable improvement over their old TVs, and 23 percent said they believed they were already receiving HD signals because logos on certain shows said they were "broadcast in HD."
Part of the problem is that retailers are more interested in making the sale than making sure that the customer has HD service when they get home, said Bruce Leichtman, principal analyst for Leichtman Research.
"It really falls to the cable and satellite providers" to explain why customers need HD signals, he said.
Randy Baumberger, president of Thornton-based retailer Ultimate Electronics, said his chain tries to do its part. But it isn't always easy.
"Consumers don't want to be educated," he said. "They want a great picture and a solution to their needs."
To do that, Ultimate's salespeople ask the consumers questions to get a sense of what they want in their TV and how they'll use it. The salesperson usually wraps up with a discussion of the need for a specific HD service because "if you lead with that, the customer would get really confused," Baumberger said. Ultimate Electronic sells DirecTV service, and customers can pick up an HD receiver in the store.
That isn't always the case at most retailers. Kersey, a former senior analyst for Current Analysis who started his Web site out of frustration during his HDTV buying experience, said stores and pay-TV providers need to do a better job of integrating HD service into the sale process. It's particularly surprising that DirecTV and Dish, which gained popularity by having a retail presence that cable doesn't, haven't pushed this angle, he said.
"When you buy a cell phone, getting a service plan isn't optional for the most part," he said.
For Dish and DirecTV, which broadcast a digital signal, the argument that subscribers need specific HD programming may be especially hard since most customers are likely happy with picture quality, analysts said. EchoStar's Neuman, however, thinks that seeing is believing.
"People who thought that they were seeing HDTV will realize the difference once they see an HD signal," Neuman said. "Side by side, there's no comparison."
Comparing providers
A look at the two providers of high-definition television programming in the area:
COMCAST CABLE
• Cost/equipment: HD box costs an additional $5 a month. It works with all levels of digital service. Comcast HDTV also works with analog service, but subscribers can only receive broadcast networks.
• HD channels available: Showtime, HBO, STARZ!, Cinemax, Discovery, iNHD1, iNHD2, ESPN, KMGH, KUSA, KCNC, KDVR, KWGN, KRMA and select Denver Nuggets NBA games via Altitude Sports & Entertainment.
ECHOSTAR
• Cost/equipment: Stand-alone HD programming (22 channels) $34.99. HD with 60 to more than 180 standard-definition channels costs from $54.99 to $104.99. Receivers cost $49 for a single receiver and $299 for a multiroom receiver with DVR.
• HD channels available (effective Feb. 1): Discovery HD, Voom Networks, ESPN, Animania, Monsters, HBO, Equator, Rave, HD Net, Family Room, Rush, HD Net Movies, Film Fest, Ultra, Pay-Per-View, Gallery, Kung Fu, Showtime, Gameplay, Treasure, TNT, News World, Cinema HD, ESPN2 HD, WorldSport, Universal, HD localsSource: Npd Group
New channels, new markets on the menu
January 23, 2006
By Joyzelle Davis, Rocky Mountain News
After waiting on the sidelines the past few years, EchoStar Communications' Dish Network has jumped into the high-definition programming market with the intention of taking the lead.
Douglas County-based EchoStar this month announced it will offer seven additional national HD channels on Feb. 1 as well as unroll local HD service in 50 markets by the end of the year. EchoStar claims its 25 total HD channels will give it the largest HD lineup among pay-TV providers; cable companies average 10 HD networks.
The addition of the local channels - which are slated to debut in Denver by mid-March - eliminates a longtime knock against the satellite provider. Cable rival Comcast, which has about 700,000 Colorado subscribers, has offered local HD channels since September 2003.
"Not being able to provide local channels was a big hurdle for Dish," especially when it came to broadcasts of sporting events, said Deepa Iyer, an analyst at consumer technology research firm Parks Associates. "So this is a big move."
Dish's announcement prompted Prudential analyst Katherine Styponias last week to upgrade EchoStar shares, saying that the new high-definition offerings "may make it easier to acquire the high-end customer that has historically gone to DirecTV."
Acquiring more high-definition customers is lucrative in part because they're likely to spend more, said Iyer, noting they pay for premium channels such as Starz Entertainment and HBO more often than regular subscribers.
EchoStar President Michael Neuman said that while affluent customers are likely to be the first to sign up for EchoStar's expanded high-definition offering, the company expects high definition to become a staple among middle-class customers as prices for HDTV sets continue to fall.
Consumers last year reported spending an average of $1,600 on HDTV sets, compared with $2,400 in 2004, according to a survey by -Leichtman Research Group. That helped boost HDTV penetration to about 12 percent of households, up from 7 percent in 2004, the report said.
"One of the largest television transitions that we'll ever see is taking place," said Neuman, who likened the adoption of high-definition television to the switch to color television from black-and-white sets. "As a multichannel distributor, you want to be ready for that."
Larger rival DirecTV, which has about 3 million more subscribers than Dish's 12 million, isn't sitting still, either. DirecTV plans to offer local channels in 36 markets by the end of March and 50 by year-end.
For both satellite providers, the addition of more HD channels is made possible by the move to next-generation MPEG4 compression technology, which allows for twice as many channels to be offered as previous MPEG2 technology. In order to shift to MPEG4, Dish and DirecTV are offering the new HD channels, including locals, only on new lines of receivers that require customers to upgrade to new models at additional cost.
The requirement means Dish's transition "isn't as simple or clear- cut as it seems" for existing subscribers, said Mark Kersey, president of BuyingHDTV.com. "There's likely going to be some resistance, and it's a little early to see how" DirecTV and Dish "are going to deal with it.
EchoStar is offering special lease deals, such as $49.99 for the ViP211 satellite HD receiver and $299 for the multiroom ViP622, to help ease the transition. Neuman, who declined to disclose EchoStar's existing number of HD subscribers, said relatively few people had actually purchased rather than leased the older HD receivers.
One opportunity Dish sees in the HD arena is the ability to add unique channels such as Voom. Most cable and satellite companies offer the same networks, which makes it "difficult to have a sustainable competitive advantage" based on content, Neuman said.
EchoStar last year obtained about a 20 percent stake in Rainbow Media's Voom - whose channels specialize in kung fu, animania and other niches - and agreed to carry the channels for 15 years. No other competitors offer Voom, although Rainbow Media has pitched other distributors, according to trade publication Multichannel News.
DirecTV has its own specialty offering with NFL Sunday Ticket, which gives the company exclusive rights to every NFL Sunday football game through 2010.
One of the greatest hurdles EchoStar and all other pay-TV providers face is convincing customers who own HDTVs that they need a specialized HD set-top box or receiver and, in the case of EchoStar, that they need to subscribe to a specialized HD programming package.
Nearly half of HDTV owners don't have special equipment to watch HD programming, according to a study by set-top box maker Scientific Atlanta. Many of those HDTV owners said they didn't get any special equipment because the picture was already a noticeable improvement over their old TVs, and 23 percent said they believed they were already receiving HD signals because logos on certain shows said they were "broadcast in HD."
Part of the problem is that retailers are more interested in making the sale than making sure that the customer has HD service when they get home, said Bruce Leichtman, principal analyst for Leichtman Research.
"It really falls to the cable and satellite providers" to explain why customers need HD signals, he said.
Randy Baumberger, president of Thornton-based retailer Ultimate Electronics, said his chain tries to do its part. But it isn't always easy.
"Consumers don't want to be educated," he said. "They want a great picture and a solution to their needs."
To do that, Ultimate's salespeople ask the consumers questions to get a sense of what they want in their TV and how they'll use it. The salesperson usually wraps up with a discussion of the need for a specific HD service because "if you lead with that, the customer would get really confused," Baumberger said. Ultimate Electronic sells DirecTV service, and customers can pick up an HD receiver in the store.
That isn't always the case at most retailers. Kersey, a former senior analyst for Current Analysis who started his Web site out of frustration during his HDTV buying experience, said stores and pay-TV providers need to do a better job of integrating HD service into the sale process. It's particularly surprising that DirecTV and Dish, which gained popularity by having a retail presence that cable doesn't, haven't pushed this angle, he said.
"When you buy a cell phone, getting a service plan isn't optional for the most part," he said.
For Dish and DirecTV, which broadcast a digital signal, the argument that subscribers need specific HD programming may be especially hard since most customers are likely happy with picture quality, analysts said. EchoStar's Neuman, however, thinks that seeing is believing.
"People who thought that they were seeing HDTV will realize the difference once they see an HD signal," Neuman said. "Side by side, there's no comparison."
Comparing providers
A look at the two providers of high-definition television programming in the area:
COMCAST CABLE
• Cost/equipment: HD box costs an additional $5 a month. It works with all levels of digital service. Comcast HDTV also works with analog service, but subscribers can only receive broadcast networks.
• HD channels available: Showtime, HBO, STARZ!, Cinemax, Discovery, iNHD1, iNHD2, ESPN, KMGH, KUSA, KCNC, KDVR, KWGN, KRMA and select Denver Nuggets NBA games via Altitude Sports & Entertainment.
ECHOSTAR
• Cost/equipment: Stand-alone HD programming (22 channels) $34.99. HD with 60 to more than 180 standard-definition channels costs from $54.99 to $104.99. Receivers cost $49 for a single receiver and $299 for a multiroom receiver with DVR.
• HD channels available (effective Feb. 1): Discovery HD, Voom Networks, ESPN, Animania, Monsters, HBO, Equator, Rave, HD Net, Family Room, Rush, HD Net Movies, Film Fest, Ultra, Pay-Per-View, Gallery, Kung Fu, Showtime, Gameplay, Treasure, TNT, News World, Cinema HD, ESPN2 HD, WorldSport, Universal, HD localsSource: Npd Group