DIRECTV 2010 Annual Report Download - page 18

next two years. We believe we can generate up to $400 million in new
revenue with this initiative, over time.
Finally, we are committed to increasing our share of the commercial
market with some great new products and services for hotels,
restaurants and other businesses. We made excellent progress in 2010,
growing this segment by nearly 20 percent, and we will continue to
build on this momentum in 2011.
managing our costs
with greater productivity & efficiency
Our fourth strategic pillar really goes to the heart of our bottom line;
and that is managing the spiraling cost of our programming content and
increasing the productivity of our service technicians and call centers.
The rising cost of content has become an industry-wide challenge, and
while we have had a great track record in negotiating fair contracts with
our programming partners over the years with few channel disruptions,
we are not immune to these pressures. Given that reality, we are going to
strategically manage cost growth by continuing to use our considerable
scale to leverage fair deals at the negotiating table.
We will also be looking at how we can adjust our packaging to
reflect cost increases and potentially remove or reposition
lesser-viewed channels.
Despite our best efforts to keep these costs down, price increases for
our customers continue to be inevitable and necessary. We need to do
a better job of explaining to our customers why we need to make these
adjustments and how they will benefit in the long term.
Increased productivity across the enterprise is high on the agenda
this year as we take significant steps to improve the efficiency of our
technicians in the field with handheld technology like GPS units, and
our call centers will see a marked improvement in productivity and
service with a new knowledge management system. Underlying all of
this, we will continue the DIRECTV tradition of tough-minded,
financial discipline in managing all of our costs.
our strategic direction in latin america
With the fantastic success we have had in the U.S., our business in
Latin America is a diamond in the rough, with revenue and subscriber
growth that is the envy of our competitors.
Business in this region really took off in 2009 and it went into overdrive
in 2010, proving that this market is not speculative—but one with the
potential to add significant value to our company.
We increased our subscriber base over 25 percent in 2010, with gross
additions of more than 2.3 million customers, up nearly 50 percent
over 2009. And by keeping churn in check, we achieved a remarkable 76
percent increase in consolidated net additions of more than 1.2 million
subscribers, bringing our base at year end to 5.8 million customers.
Add Sky Mexico and we had nearly 8.9 million customers throughout the
entire region. Our revenue growth was equally impressive, increasing
25 percent to nearly $3.6 billion. All of these numbers beat our plan for
2010 by a substantial margin. And the best is yet to come.
exciting opportunities for growth
Looking at the demographic/economic trends and the low pay-TV
penetration, there is an exciting opportunity ahead for further growth
in the region. The continent’s economy continues to grow with more
disposable income per household, while consumers in Latin America are
trending younger than just about any other region in the world.
For example, in two of the largest countries in which we operate, Brazil
and Mexico, about 70 percent of the population is under the age of 40.
All of this translates to a rapidly growing middle class, which is the
demographic sweet spot of any pay-TV service. Those consumers are
in a better position to buy, and with our continent-wide footprint, we
are in a better position to sell.
With the demographics in our favor—a trend that is expected to
continue for the next decade and beyond—and pay-TV penetration at
a low 25 percent across the region, we believe the market can double
over the next five years. That’s about 30 million more customers that
we believe will add pay-TV service—a huge target market to which we
can apply our phenomenal service and marketing capabilities.
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With the fantastic success we have
had in the U.S., our business in Latin
America is a diamond in the rough with
revenue and subscriber growth that is
the envy of our competitors.