Dish Network 2003 Annual Report Download - page 10

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5
Sales, Marketing and Distribution
Sales Channels. Independent distributors, retailers and consumer electronics stores currently sell EchoStar receiver
systems and solicit orders for DISH Network programming services. While we also sell receiver systems and
programming directly, independent retailers are responsible for most of our sales. These independent retailers are
primarily local retailers who specialize in TV and home entertainment systems. We also sell EchoStar receiver
systems through nationwide retailers such as Costco, Sears and Wal-Mart, and certain regional consumer electronic
chains. In addition, RadioShack Corporation sells EchoStar receiver systems and DISH Network programming
services through its 5,200 corporate stores and in approximately 1,000 dealer franchise stores nationwide.
We currently have an agreement with JVC to distribute our receiver systems under its label through certain of its
nationwide retailers, and an agreement with Thomson multimedia, Inc. to distribute our receiver systems under the
EchoStar and RCA label through certain of its nationwide retailers.
We offer our distributors and retailers what we believe are competitive incentive programs. Through these
programs, qualified distributors and retailers receive, among other things, commissions upon new subscriber
activations and monthly residual incentives dependent, among other things, on continued consumer subscription to
qualified programming.
Marketing. We use regional and national broadcast and print advertising to promote the DISH Network. We also
offer point-of-sale literature, product displays, demonstration kiosks and signage for retail outlets. We provide
guides that describe DISH Network products and services to our retailers and distributors at nationwide educational
seminars and directly by mail. Our mobile sales and marketing team visits retail outlets regularly to reinforce
training and ensure that these outlets quickly fulfill point-of-sale needs. Additionally, we dedicate a DISH Network
channel and provide a retailer specific website to provide information about special services and promotions that we
offer from time to time.
Promotional Subsidies. Our future success in the subscription television industry depends on, among other factors,
our ability to acquire and retain DISH Network subscribers. We provide varying levels of subsidies and incentives
to attract customers, including free or subsidized receiver systems, installations, antenna, programming and other
items. This marketing strategy emphasizes our long-term business strategy of maximizing future revenue by selling
DISH Network programming to a large potential subscriber base and rapidly increasing our subscriber base. Since
we subsidize consumer up-front costs, we incur significant costs each time we acquire a new subscriber. Although
there can be no assurance, we believe that on average we will be able to fully recoup the up-front costs of subscriber
acquisition from future subscription television services revenue.
During July 2000, we began offering our DISH Network subscribers the option to lease receiver systems. Our
current equipment lease promotion, the Digital Home Advantage program, offers consumers the ability to lease up
to three receiver systems and connect up to four televisions with one of several qualifying programming packages
starting at $29.99 per month, including local programming, where available. We expect this marketing strategy will
reduce the cost of acquiring future subscribers because we retain ownership of the receiver systems. Upon
termination of service, Digital Home Advantage subscribers are required to return the receiver and certain other
equipment to us. While we do not recover all of the equipment upon termination of service, equipment that is
recovered after deactivation is reconditioned and re-deployed at a much lower cost than new equipment.
We base our marketing promotions, among other things, on current competitive conditions. In some cases, if
competition increases, or we determine for any other reason that it is necessary to increase our subscriber acquisition
costs to attract new customers, our profitability and costs of operation would be adversely affected.