DIRECTV 2011 Annual Report Download - page 32

DIRECTV
telephone number 24 hours a day, seven days a week, to request assistance for • Telephone Companies. Several telcos have upgraded a significant portion of
hardware, programming, installation, technical and other support. We continue to their infrastructure by replacing their older, copper wire telephone lines with
increase the functionality of telephone-based and web-based self-care features in high-speed fiber optic lines. These fiber lines provide the telcos with
order to better manage customer service costs and improve service levels. significantly greater capacity enabling them to offer new and enhanced
services, such as broadband Internet access at much greater speeds and
Competition digital-quality video. For example, Verizon announced that at the end of
2011, it had the capability to serve approximately 16.5 million homes with
We face substantial competition in the MVPD industry and from emerging fiber optic lines with the goal of having the capability to serve 18 million
digital media distribution providers. Our competition includes companies that offer homes. In addition, as of year-end 2011, AT&T had deployed fiber optic
video, audio, interactive programming, telephony, data and other entertainment lines with the capability to serve approximately 30 million homes. As of
services, such as cable television, other DTH companies, telcos, wireless companies year-end 2011, Verizon had approximately 4.2 million video subscribers and
and companies that are developing new technologies, including online video AT&T had approximately 3.8 million video subscribers, representing
distributors, or OVDs. Many of our competitors have access to substantially greater approximately 8% of MVPD subscribers. Similar to the cable companies,
financial and marketing resources. We believe our brand, the quality and variety of the telcos expect to offer their customers multiple services at a discount on
video, audio and interactive programming, quality of picture, access to service, one bill.
availability of HD and DVR services, customer service and price are the key
elements for attaining and retaining subscribers. Our approximately 19.9 million • Other Direct Broadcast Satellite and Direct-To-Home Satellite System
subscribers represent approximately 20% of MVPD subscribers at December 31, Operators. We also compete with DISH Network Corporation, or DISH,
2011. which had approximately 14 million subscribers at the end of 2011,
representing approximately 14% of MVPD subscribers. On April 26, 2011,
•Cable Television. We encounter substantial competition in the MVPD DISH Network acquired certain assets of Blockbuster. DISH is using
industry from cable television companies. According to the National Blockbuster to offer video content through multiple distribution channels
Cable & Telecommunications Association, 129.7 million U.S. housing units such as mail and through streaming services via the Internet. Other
are passed by cable, representing 98% of total U.S. homes. Most cable domestic and foreign satellite operators also have proposed to offer DTH
television operators have a large, established customer base, and some have satellite service to U.S. customers using U.S.-licensed satellite frequencies or
significant investments in companies that provide programming content. foreign-licensed frequencies that have the ability of covering the United
Approximately 100 million households subscribe to an MVPD service and States.
approximately 58% of MVPD subscribers receive their programming from a
cable operator. In addition, most cable providers have completed network • Video via the Internet. With the large increase in the number of consumers
upgrades that allow for enhanced service offerings such as digital cable, HD with broadband service, a significant amount of video content has become
channels, broadband Internet access and telephony services. Cable available on the Internet for users to download and view on their personal
companies bundle these services, offering discounts and providing one bill computers, televisions and other devices. For example, Apple offers
to the consumer. In addition, Comcast, Time Warner Cable, Cox and thousands of television shows and movies for rental, some in
Brighthouse Networks have entered into an agreement with Verizon Wireless high-definition, on the online iTunes Store and with the introduction of
for the sale of the providers’ wireless spectrum licenses. As part of this iCloud last year, all of a user’s content could be shared wirelessly across
agreement, Verizon Wireless has entered into a joint marketing agreement Apple devices. In addition, Hulu is an online video distributor which
with the cable operators to sell their products and services in storefronts and provides free movies and TV shows from over 260 content providers
over the Internet. The sale of spectrum licenses is subject to regulatory including FOX, NBC Universal, ABC, Lionsgate, MGM, National
approval. Geographic, Paramount, A&E Television Networks, Sony Pictures and
8