Digital satellite television operator DIRECTV, which added 444,000 subscribers in the last quarter, is planning further advanced and interactive services, including a new digital video recorder and a home media centre.
Chase Carey, president and chief executive of DIRECTV Group, noted that while he considered 2004 a transition year, DIRECTV added more customers in the United States than any other pay television service in the country. Later in 2005 he said DIRECTV will roll-out local channels in high-definition, adding “We also intend to introduce advanced new programming and interactive services as well as a new digital video recorder with interactive capabilities”.
Significantly, DIRECTV chose to focus on high-definition and interactive services as key differentiators. The company also confirmed plans to introduce a home media centre by the end of the year. Announced at the CES trade show, the home media centre will be the most technologically advanced DIRECTV receiver developed, allowing customers to access digital video, photos and music seamlessly from multiple sets in a household.
At the end of 2004, the total number of subscribers to DIRECTV in the US stood at 13.94 million, up 1.7 million on the previous year. Full year revenues increased 21% to $11.36 billion, but the company reported an operating loss of $2.11 billion and a net loss of $1.94 billion, compared to $362 million for the previous year. The latest results include a $217 million charge for the expected sale of its Hughes network systems business and a $45 million charge for the closure of its Mexico operations.
DIRECTV reported that subscriber acquisition costs had risen as a result of an increase in the average number of set-top boxes and digital video recorders purchased by new subscribers, partially offset by lower manufacturing costs. Subscriber retention costs were also higher due to an increase in the number of existing customers taking DVRs and other equipment upgrades.
In a conference call with analysts, Carey said DIRECTV expects to pick up 1.25 million to 1.5 million net subscribers in 2005 and over 1 million in 2006. He added that the cost of retaining subscribers would decrease as the company rolls out its latest set-top boxes from NDS. “These boxes will enable us to achieve customer upgrades much more cost effectively through processes like downloading software, upgrades for interactivity or adding disk capacity without replacing boxes.”