DIRECTV 2007 Annual Report Download - page 21

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THE DIRECTV GROUP, INC.
•Unique Content. We expect that we can leverage our greater scale to offer unique and compelling
content to subscribers. For example, through the 2008-2009 season Sky Brazil, Sky Mexico and
PanAmericana have licensed exclusive rights to the Spanish soccer league, which in most
countries is the second most popular soccer league, after the local country leagues. As a result,
our service is the only one that allows subscribers to see all of the Spanish league games. In
addition, we have participated in creating an exclusive golf channel for Latin America, in an
effort to provide programming that is highly attractive to an important customer niche.
•DVR. A key aspect of our strategy is to use the availability of high quality, reasonably priced
DVRs as a cornerstone to distinguish our service from that of our competitors. Generally
speaking, DVRs are not prevalent in Latin America. We believe that our technology and
pan-regional scale, as well as the relationship with DIRECTV U.S., can be leveraged to provide
DVRs that will be more functional and less costly than those our competitors may introduce. In
2007, PanAmericana introduced DVRs in its territories of operation, and Sky Brazil is also
launching a new DVR that will improve on a prior model that was previously distributed in
limited numbers.
•Enhanced Programming Features. We believe that we can differentiate our service from our
competitors through the use of enhanced features such as interactivity. For example, we offered
interactive services for matches from the 2006 World Cup of Soccer.
•Prepaid Subscription Service. We believe that by offering pre-paid subscription services we can
differentiate our service from our cable competitors and access new segments of the markets in
which we operate. We began to actively market pre-paid services in Venezuela in early 2007, and
plan to launch this service in other countries in 2008. No other MVPD operator in Latin
America currently offers pre-paid services.
Unlike our post-paid subscribers, our prepaid subscribers are generally not required to meet
specified credit standards or make minimum commitments in order to be a subscriber. However,
they are required to purchase and install the equipment necessary to receive our signal, mostly
at their own expense. This limits our upfront investment in the subscriber. Following the first
month of service, which is typically offered free at the initial time of purchase, prepaid
subscribers purchase a prepaid card and telephonically replenish their accounts as their account
balances deplete. Our prepaid cards are widely accessible at kiosks and outlets and are offered
at various denominations.
Offering pre-paid services may offer several strategic advantages to us in Latin America. First, it
provides us access to subscribers in cash-based economies who do not meet our credit standards
for post-paid services or do not want to make longer term commitments to our service. Second,
since most of our cable competitors still have a large percentage of their subscribers who are
analog, they are not able to offer pre-paid services as efficiently. Third, we believe that the
ability of subscribers to reconnect without additional investments in equipment or installation
could provide protections and limit churn in case of an economic slowdown.
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