Dish Network 2015 Annual Report Download - page 16

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September 30, 2015, AT&T and Verizon had approximately 5.9 million U-verse and 5.8 million FiOS TV
subscribers, respectively. These telecommunications companies represent approximately 12% of pay-TV
subscribers.
x Internet Delivered Video. We face competition from content providers and other companies including, among
others, Netflix, Hulu, Apple, Amazon, Google and Verizon, who distribute video directly to consumers over the
Internet. In addition, programming offered over the Internet has become more prevalent and consumers are
spending an increasing amount of time accessing video content via the Internet on their mobile devices.
Significant changes in consumer behavior with regard to the means by which consumers obtain video
entertainment and information in response to digital media competition could have a material adverse effect on
our business, results of operations and financial condition or otherwise disrupt our business. In particular,
consumers have shown increased interest in viewing certain video programming in any place, at any time and/or
on any broadband-connected device they choose.
x Wireless Mobile Video. We may also face increasing competition from wireless telecommunications providers
who offer mobile video offerings. These mobile video offerings will likely become more prevalent in the
marketplace as wireless telecommunications providers expand the fourth generation of wireless
communications.
x Small and Rural Telephone Companies and Google Fiber. Other telephone companies are also finding ways to
deliver video programming services over their wireline facilities or in a bundle with other MVPD providers.
For example, DirecTV has agreements with CenturyLink, Exede, Cincinnati Bell, HughesNet, Windstream,
Verizon and Mediacom to bundle their individual DSL or satellite broadband and telephony services with
DirecTV’s video service. Google has also deployed its own fiber network in the Kansas City metro area, Provo,
Utah as well as Austin, Texas, with speeds up to one gigabit. Google has announced plans to deploy fiber
networks in additional metro areas across the country.
Acquisition of New Subscribers
We incur significant upfront costs to acquire subscribers, including advertising, retailer incentives, equipment,
installation services and new customer promotions. Certain customer promotions to acquire new subscribers result in
less programming revenue to us over the promotional period. While we attempt to recoup these upfront costs over the
lives of their subscriptions, there can be no assurance that we will be successful in achieving that objective. With respect
to our DISH branded pay-TV service, we employ business rules such as minimum credit requirements for prospective
customers and contractual commitments. We strive to provide outstanding customer service to increase the likelihood of
customers keeping their pay-TV service over longer periods of time. Our subscriber acquisition costs may vary
significantly from period to period.
Advertising. We use print, radio, television and Internet media, on a local and national basis to motivate potential
subscribers to contact DISH and Sling, visit our websites or contact independent third-party retailers.
Retailer Incentives. In general, we pay independent retailers an upfront incentive for each new DISH branded pay-TV
subscriber they bring to DISH that results in the activation of qualified programming and generally pay independent
retailers small monthly incentives for up to 60 months; provided, among other things: (i) the retailer continuously
markets, promotes and solicits orders for DISH products and services; (ii) the retailer continuously provides customer
service to our DISH branded pay-TV subscribers; and (iii) the customer continuously subscribes to qualified
programming.
Equipment. We incur significant upfront costs to provide our new DISH branded pay-TV subscribers with in-home
equipment, including advanced HD and DVR receivers, which most of our new DISH branded pay-TV subscribers lease
from us. While we seek to recoup these upfront equipment costs mostly through monthly fees, there can be no assurance
that we will be successful in achieving that objective. In addition, upon deactivation of a subscriber we may refurbish
and redeploy their equipment which lowers future upfront costs. However, our ability to capitalize on these cost savings