News Analysis Why
Did DIRECTV Start Adding HD Again?
By Swanni Follow @SwanniOnTV
Washington, D.C. (February 4, 2013) -
In 2007, DIRECTV
became the HD channel leader, increasing its overall total to
nearly 100 channels. Over the next year or so, the satcaster would add a
new HD channel every month or so. Sometimes, it would add a
handful of new HD channels. Or even more.
But then in 2009, it stopped. From 2009 to 2011, the company
added just a few high-def channels.And then to add insult to
injury,
DIRECTV executives started to make noise that its subscribers
already had
enough
national HD channels.
"For
DIRECTV, the HD “bigger is better” battle is over. “To be
honest, I think right now, everyone’s got most of the important
stuff in HD,” Derek Chang, DIRECTV executive vice president of
content strategy and development, told Multichannel News in July
2011. “Once we got to 100 channels, it became about delivering
the overall experience.”
The company even tried to fool their subscribers by
running a bogus campaign
suggesting it had the capacity to offer 200 HD channels,
although it obviously never planned to actually offer 200.
Looking at the sluggish economy, DIRECTV clearly concluded that
it no longer had the resources to devote to HD expansion
efforts. And it was particularly adverse to adding basic cable
channels in HD because that required paying more to acquire the
rights
For DIRECTV HD fans, it didn't look good. But then in September
2011, there was a glimmer of hope when DIRECTV added AMC in
high-def after subscribers waged an informal campaign to get the
popular channel in HD. Then in early 2012, it added TruTV in
high-def and later in the year it added Turner Classic Movies, E!,
National Geographic Wild, BBC America, ION, DIY and Disney Kids
in HD.
And last month, it added eight more HD channels, including IFC
and CNN Headline News. That means DIRECTV has added roughly 20
new national HD channels in the last 10 months or so.
Suddenly, DIRECTV is the HD leader again and the company is
making bold statements
about going all-HD by 2016.
What changed?
It's easy to suggest that DIRECTV believes the economy is
improving and therefore is more willing to invest in acquiring
the rights to carry channels in high-def. And that certainly is
a factor.
But there's more going on here. For years, DIRECTV increased its
net subscribers every quarter; in fact, it added a lot of new
subscribers every quarter. But in August 2011 it reported that it
gained just 26,000 subscribers in the
2011 second quarter,
the satcaster's lower quarterly gain in history and
significantly below the Wall Street consensus projection of
57,000.
DIRECTV then reported it added 125,000 subscribers in the 2011
fourth quarter, which was considerably less than its 2010 fourth
quarter result when it added 289,000 subs. DIRECTV said its
subscriber churn -- the industry term used for subscribers who
drop the service -- was slightly higher in the 2011 fourth
quarter (1.52 percent) compared to 2010 (1.44 percent.) For the
year, the satcaster's churn was 1.56 percent, compared to 1.53
for 2010.
The company was losing its magic touch and the decision to
ignore arguably its most valuable subscriber base -- the HD
audience who historically pays more in monthly fees than any
other group -- was having an effect. (This was not unseen by
all; see
my prediction.)
Making matters worse, Dish, DIRECTV's top rival, had become more
aggressive in adding HD channels and even cable operators, such
as Comcast, were expanding its HD channel counts in numerous
markets.
So in my view, DIRECTV finally decided that being 'penny smart
and pound foolish' had gone on long enough. The company decided
to get back in the HD game again and the result has been a
mini-explosion of new high-def channels over the last 12 months.
And it's a good bet that more HD channels will be launched later
this year, sooner than later, in fact. DIRECTV has changed
course and the HD audience is the better for it.
