DIRECTV 2011 Annual Report Download - page 18

for whom the living room TV set may not be the center of their TV experience.
They’re using an array of digital devices to view content – much of it free – no
matter where they are.
We view these changing conditions not as impediments to our business, but
as opportunities to further distinguish ourselves in the marketplace and deliver
on our growth and return targets in the years ahead. With these challenging
headwinds, we’re adjusting our tack and have established three priorities for
our U.S. business in 2012:
• Effectively manage our core business by rebalancing growth and
retention with an emphasis on better cost management.
• Continue to deliver on the strategies we outlined in our annual report
last year, including delivering the best anywhere/anytime experience
and generating new sources of revenue.
• Further transform the overall experience for customers to keep
them passionately loyal for life.
REBALANCING PROFITABLE GROWTH
AND RETENTION WHILE MANAGING COSTS
We’ve always excelled at delivering on our financial and operating plans and
we are committed to doing that again in 2012. Our focus on attracting the
best, highest-quality customers and matching them with our world-class
entertainment and service experience will help us achieve solid profitable
growth. But in an environment of high single-digit content cost increases, we
need to rethink the balance between what we spend on acquiring those new
customers and what we need to do to keep our current customers passionate
about their DIRECTV. That’s not to say acquisition will take a back seat.
We’re still planning to grow market share in 2012. But it makes sense, given
the maturation of the market, to demonstrate our appreciation for existing
customers’ loyalty by investing more in them. Over time we believe this modest
shift will lead to higher returns and better results.
To subtly shift the balance between the top and bottom line, we’ve launched
new initiatives this year to better match the right offer with the right customer
– a combined advanced services offer for those who love technology and
a lower-priced Entertainment package for cost-conscious, value-oriented
customers. These initiatives will reduce our costs and allow us to profitably
deliver a great experience for the customer.
Though shifting the balance between acquisition and retention will
improve our bottom line, high programming costs still remain one of our
most challenging issues. We will continue to tenaciously pursue greater
package flexibility, ensure we are treated fairly relative to our competitors,
and secure digital rights for future streaming services as we negotiate deals.
All of these changes will bring more value to our customers who want that
anywhere/anytime experience.
We are also increasing our focus on disciplined cost management across
the enterprise, flattening our general and administrative expenses and driving
productivity improvements in subscriber services, acquisition costs and
broadcast operations.
REINVENTING THE TV EXPERIENCE:
ANYWHERE/ANYTIME; BETTER BUNDLES; NEW REVENUE
We have made considerable progress implementing the strategies we laid
out in my letter to you last year. In particular, we are focusing on four areas in
2012: providing customers with the best anywhere/anytime, multiple-screen
experience; connecting customer boxes to the Internet; closing the revenue
gap; and transforming the customer experience.
Before we “reinvent TV” and inject that “wow!” factor into the experience,
it is essential that we do a better job of understanding one size doesn’t fit all.
Our customers have different tastes, wants and levels of income. Therefore,
our first order of business is to make sure we tailor that entertainment
experience to better fit each customer’s needs.
In addition to the simplified offer and new Entertainment package, we’ve
introduced an array of great products and services that will thrill and
delight our customers in 2012 and beyond. We also put a new face on the
DIRECTV entertainment experience late last year with our graphically rich
HD on-screen programming guide. And it’s far more than just a face lift.
We’ve in tr odu ced an arr ay of great
produ ct s and services that will
thrill and delight our customers in
2012 and beyond.