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DIRECTV Still Has an Internet Problem
By Swanni

Washington, D.C. (March 8, 2013) - Patrick Doyle, DIRECTV's chief financial officer, says only three million, or 15 percent, of DIRECTV subscriber boxes are connected to a Broadband Internet service.

Doyle made the disclosure this week at the Deutsche Bank media conference.

The 15 percent total is low, particularly when compared to cable and telco TV operators who offer both Internet and video service. (Comcast has more than 18 million Broadband subscribers.) DIRECTV does not have its own Internet Service so it must rely on subscribers finding other services to connect to the Net -- and that's been a tricky and thorny problem for the satcaster for several years.

DIRECTV has invested heavily in a Broadband-enabled Video on Demand service called DIRECTV Cinema, but buy rates have been slowed by its low number of Broadband-connected  set-tops.

The NPD Group this week estimated that DIRECTV and satellite rival Dish, which also does not have an Internet service, generated an average of just $10.33 per subscriber in Video on Demand revenue in 2012. That's an average of just slightly more than two HD films for the entire year, considering that DIRECTV and Dish's VOD cost for HD movies start at $4.99.

In contrast, Verizon and AT&T, both of which offer Net service as well as video service, averaged $25.29 in VOD revenue per subscriber in 2012. Cable operators, which also offer both Net and video services, averaged $13.83.

At the Deutsche Bank conference, Doyle also noted that DIRECTV is developing 'Voice Search' and 'Program Discovery' programs that require Broadband connections.

more we connect, the more interactivity we can get with the customer so that they can be watching a show and doing other things, whether it's weather or interacting with the show," Doyle said.

On the bright side, DIRECTV said a year ago that it
had two million subscriber boxes connected to the Net so the company has added one million in 12 months. Doyle said DIRECTV's next goal is to get Broadband on four million set-tops.

Part of DIRECTV's problem is that the satcaster does not offer a set-top that includes built-in Wi-Fi that would easily enable a subscriber to connect to the net via his or her home network. But DIRECTV reportedly will launch a wireless HD DVR later this year, perhaps as early as this spring.

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