How Satellite Stacks Up

Carving Up the Multiplatform Pie

By Evie Haskell

 

Scratch the veneer of today’s multiplatform world and you’ll find a satellite.
More accurately, you’ll find thousands of satellites – around 3,400 by some 2008 counts.  Circling the globe, these space-based communicators provide the backbone for virtually all things multiplatform.  Television, high-speed internet and voice:  The great majority of each of these services traces back, eventually, to those orbiting bits of composites and computer chips.

At the top level of the satellite world are such massive concerns as SES and Intelsat.  These giants provide services to broadcasters, cable programmers, telcos and others concerned with shooting bits and bytes around the globe.  Below the really big dogs are dozens of other firms ... for example, Hughes, ViaSat, Inmarsat and Globalstar ... which offer broadband, voice and video services to governments and businesses and, of course, consumers.

It’s the consumer level that concerns us here.  More specifically, video for consumers.  And even more specifically than that, video for consumers in the U.S.

But first, the world:

According to a recent report from Global Industry Analysts, the world direct-to-home satellite TV market is set to pass the $ 50 billion mark in 2009.  Much of that $50 billion comes from outside the U.S.  There are, after all, 110 DTH pay TV services around the world according to Euroconsult.  Only two of them are in the U.S.  (Well, three if you count the old C-Band services.  But at last count the big dish had only a relative handful video subscribers making it barely a blip in the U.S. market.)


So that’s the good news for U.S. satellite providers. 

Beating The Bundle

 

The bad news comes delivered in a single word: Bundle.

That, of course, is the voice/video/data package which, when sweetened with discounts, is meant to draw consumers like flies to honey.  While satellites can (and do) offer all these services, questions of cost and capacity have kept the big DBS players from launching their own bundles.  Thus the bundle has become a formidable competitive tool for cable and telco services in U.S. markets.

But has the bundle proven to be the dish slayer it was originally envisioned as?  Or is it more a kind of glue, helping the MSOs to keep existing customers rather than drawing new ones?

Those questions are fodder for many a late night debate.  And the tenor of the debate will undoubtedly change as the services offered by various providers and the preferences of consumers change.

For now, it would appear that video ... and, more specifically, video as shown on the TV ... remains a critical component for U.S. customers.  And here, the DBS services appear to hold their own. 

The charts and graphs in this  BRIDGE take a look at U.S. DBS services as they compare to cable and telcoTV in terms of channel offerings, competitive stature and the like.•

Competition in the Biggest Markets

 

The question is not just how well satellite and telcoTV can compete in general, but can they take on the long-time (and massive) cable operators?  To judge this, we’ve taken a look at household penetrations in the nation’s five largest markets.

By the end of the second quarter, only one of the nation’s five largest markets could be rated as achieving

competitive parity  In the Dallas DMA, DBS subscriber penetrations were slightly less than 5 percentage points behind the cable operators, represented primarily by Time Warner Cable.  When DBS numbers are combined with telcoTV numbers, the newcomers actually take the lead in the Dallas DMA reaching more than 45% of households versus cable’s 41.3%.

The only other top 5 DMA where the newcomers hold significant market share is in Los Angeles where the combination of DBS and telcoTV households lag cable penetrations by just 6.7%.

Looking to the future, however, the newer multiplatform services seem destined to gain more market share as the 12 month period ending on June 30, 2009 saw cable operators losing ground steadily while both DBS and telco operators gained ground.•

Who Wins With Unique Video?

SD or HD? Sports or Premiums?

 

If you start from the premise that one critical component in multiplatform competition is the quality and availability of video services, it becomes important to look at specific network offerings.  For this purpose, we’ve compared the video line-ups of cable, DBS and telcoTV providers in the top five DMAs.

This, of course, is not a simple task: Different types of services, special offers and the like make apples-to-apples comparisons daunting.  To simplify the task, and still offer valuable comparisons, we have made the following judgement calls:  First we are looking only at unique networks – that is, east and west feeds and the like are not included.  Second, we have eliminated broadcast network plus VOD or pay-per-view offerings from consideration.  And finally, each of the multi-offerings sports packages – such as the NHL Center Ice or DIRECTV’s NFL Sunday Ticket – are counted only once per provider.  (This, we must point out, puts DIRECTV at a disadvantage given its very popular – and exclusive – Sunday Ticket.  So our apologies to DIRECTV but as you’ll see, the DBS No. 1 still holds a strong first place in sports.)

  Another important apples-to-apples barrier is the fact that all of the top five DMAs are served by not just one but several cable operators.  To resolve this conundrum, we simply chose the single cable system for each provider in each DMA that offers the biggest package of video services.  Thus each of the following charts show cable’s best for the DMA compared to the existing DBS and telco offers.

Unique Nets: The HD Winner

 

We’ll start with total unique networks offered (given the previous conditions) ... and we’ll look at them in terms of standard-definition and high-definition transmission.  (Another qualification here:  We are NOT considering the various back-and-forth tussles over compression and whether any given operator’s HD channels are really HD or maybe degraded HD or whatever.  Just HD “yes” or “no” goes into our calculations.)

So who’s the HD (and overall) winner? 

Last year, DIRECTV ran a smart, and very successful marketing campaign, touting its HD offerings.  This year, however, the DISH Network has over taken DIRECTV offering a total of 84 HD nets versus DIRECTV’s 78.  
But in several of the top five DMAs terrestrial based services trump both DBS line-ups.  At the top of the heap, the Time Warner system serving Flushing, NY hits an all-time high of 92 HD networks.

Sports & Premium Winners

 

In the arena of sports, however, DIRECTV takes a clear No. 1 (and that’s minus Versus). In all, the DBS provider offers 73 unique sports nets with more than one-third of them in HD. In the cable and telco groups, the largest sports offering in the top five DMAs comes from the Verizon FiOS New York system, where the telco TV service offers 47 unique sports networks, with 17 of them in HD. On the premium side of the equation, however, the situation is reversed. Both DIRECTV and DISH fall below the median top-five DMA premium offering of 52 networks. The premium net winners are the telco guys: Both Verizon FiOS and AT&T U-verse offer a total of 62 premium networks in all their top five DMA systems with 24 of those premium nets transmitted in HD.•

The Cable Center Bibliography

 

If you are interested in reading more about this topic the following is a selection of additional periodicals provided by The Cable Center’s Barco Library.  Dedicated to chronicling cable’s varied and colorful history, The Barco Library houses the largest collection of cable telecommunications equipment, photographs, and marketing and informational materials in the industry.  

Visit www.cablecenter.org for more information.

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