DIRECTV 2011 Annual Report Download - page 30

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DIRECTV
streaming capabilities of authorized cable and broadcast network regions and eventually in the individual home. With this new
content to our customers. technology, we expect to significantly increase our advertising revenues
over the coming years.
•Provide Portable Access to DVR Content. We believe many of our
customers increasingly desire the ability to take content with them, due • Deliver New Products Focused on Priority Commercial Segments. Based
in part to the growing popularity of smart phones and tablets. For this on our extremely low market penetration rates, we believe commercial
reason, in 2011, we introduced ‘‘Nomad,’’ a service that enables properties represent another growth opportunity for DIRECTV. For
customers to download content stored on their HD-DVR and view it example, although historically we have competed effectively in the
remotely. In the future, we expect to enhance the Nomad service by higher-end hotel market, we expect that in the coming years, hotels
introducing the ability to stream HD-DVR content to mobile devices will be upgrading their television service from standard definition to
inside and outside of the home. HD which will present us with opportunities for growth. In the future,
we will introduce new features, applications and package enhancements
•Create New Revenue Platforms. In order to continue growing DIRECTV that will provide an integrated residential television experience for our
revenues while maintaining strong profit margins, a key strategic objective is hotel customers to offer to their patrons. We also currently have low
to capture incremental revenue streams in key areas including market share in the private businesses and smaller bars and restaurants
(1) DIRECTV Cinema, (2) addressable and local advertising and (3) the segments and we intend to grow our share in these markets with new
commercial property market. technologies such as our ‘‘Message Board’’ or digital signage product, as
•Enhance DIRECTV Cinema. We believe we have a significant well as from improved management, targeting, billing, pricing and
opportunity to generate incremental VOD revenues mostly by packaging.
expanding our VOD library and making it easier for customers to •Enhance Productivity and Manage Costs. Improving our productivity is a
watch movies and shows. In 2011, we continued to make great strides critical element of our goal to maintain strong margins particularly given
toward this goal by ‘‘pushing’’ top-rated movies, including many rising programming costs and the competitive nature of our industry. In
available on the same day of the DVD release, onto customers DVRs particular, we plan to focus our efforts on effectively managing our
for instant viewing and by expanding our enhanced movie service programming costs and capturing enterprise-wide productivity
called DIRECTV CINEMA to provide most of our customers with improvements.
access to significantly more movies than before. For example, for those
customers with HD-DVRs connected to a broadband service, we now • Strategically Manage Programming Cost Growth. Programming costs are
offer approximately 7,000 movie and television titles, and we expect to DIRECTV’s largest expense and as a result, we must manage these
continue adding more titles in 2012. Looking forward, DIRECTV costs as effectively as possible particularly considering that we expect
Cinema enhancements will include further expansion of our video programming costs to increase at a faster rate in the future than in
library as well as increased availability of VOD and premium movies prior years primarily due to higher sports costs (including the NFL
that can be accessed from laptops, tablets, smartphones or computers. SUNDAY TICKET) and higher retransmission fees for the carriage of
local channels. In addition, due to competitive pressures, there is a risk
•Launch Addressable and Local Advertising. Our advertising revenue per that we will be unable to pass such increases through to our
subscriber trails many of our competitors. This is because, unlike the subscribers. Our strategy for minimizing this rate of cost growth is to:
cable industry, we have not had the ability to target advertising at the
local level due to the nature of our national satellite infrastructure. • Leverage our size, growth and attractive subscriber demographics
Using new technology, we now have the capability to insert advertising to attain competitive terms and conditions.
into individual DVRs to enable advertisers to target customers in local
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