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Satellite TV Industry Prepares for HDTV Expansion
Despite the aggressive expansion of digital cable services across the country, the direct-to-home satellite TV industry continues to tally subscriber gains.
To counter the efforts of cable operators and to regain lost customers, the nation’s two remaining direct broadcast satellite (DBS) operators – DirecTV and EchoStar – made pledges to expand services dramatically with more high-definition channels in coming years. In each case, this will be accomplished through the launch of additional satellites and switch over in compression systems from MPEG 2 to MPEG 4 schemes. According to an FCC 2005 competition study, cable TV’s share of the multi-channel video programming distributor (MVPD) market is now approximately 69.4 percent, down from almost 71.6 percent a year earlier. The second and third largest MVPDs now are DBS operators, DirecTV and EchoStar, respectively. Combined, the satellite providers currently serve almost 27.7 percent of all MVPD subscribers in 2005, compared to approximately 25.1 percent in 2004, the FCC report said. Satellite TV Today
The satellite TV industry once relied on large movable circular C-band dishes that could be aimed at different satellites to pick up the analog signal feeds of network broadcasters and cable program providers for free. As the industry began to grow, program providers added scrambling systems to their signals to protect their paid subscription services. With the introduction of small dish systems powered by digital compression technologies, called direct broadcast satellite (DBS) systems, the digital direct-to-home pay satellite industry arrived in the mid-1990s, building mass-market acceptance in record time. DBS Brings Better Pictures and Sound
Both DBS TV services deliver more than 200 channels of sharp, clear images and sound comparable to that of DVD players. Additionally, satellite providers now deliver standard definition broadcasts with special 5.1-channel Dolby Digital audio surround sound, comparable to that offered by DVD players, on both HDTV and some standard definition TV channels. The systems each require small dishes, typically between 18-inches and 29-inches in diameter, to collect digitally compressed signals carrying more than 200 channels of video and audio programming. Both services pushed subscriber registrations with promotional incentives, including free installation and virtual hardware giveaways in exchange for minimum service commitments of a year or longer. Both systems offer similar programming packages that comprise basic and premium cable networks, pay-per-view movies, news, information and sports networks. But the larger capacity available to satellite operators offers a greater sele ction of premium and special interest programming than most analog cable systems. However, the arrival of new digital cable services reduces that advantage.
Source: CEA Market Research Subscriber Growth Continues
According to company reports at the end of 2004, DBS providers combined accounted for more than 25 million subscribers. DirecTV ended 2005 with just over 15.1 million subscribers, while EchoStar had 12 million subcribers by the end of 2005. The rate of growth for DBS set-top equipment sales started to decline in 2005, when CEA said the DBS industry shipped 14.2 million satellite set-top boxes to new and existing subscribers, down 14.7 percent from 2004. That number is expected to rise again in 2006 to 16.4 million. The average price of a satellite set-top box was estimated at $96 for 2005, but typically satellite providers offer equipment at substantially reduced prices as incentives to sign on new subscribers. Satellite Looks To Expand HD Role
Since the launch of HD broadcasting, satellite providers led the nation in the selection of HDTV services, however, some cable providers have stepped up HD package offerings surpassing what satellite now carries. That is scheduled to change shortly, however, as both DirecTV and EchoStar migrate to MPEG-4 digital compression technologies that will allow them to expand their HD services with local channels and additional HD satellite/cable fare. DirecTV Makes Channel Expansion Steps Under the new management of News Corp., DirecTV wasted little time in announcing plans to launch four next-generation satellites that will provide the satellite service with a massive expansion in local and national HD channels over several years. To date, local HD channels have been the biggest advantage cable operators have wielded over their satellite competitors. In 2005, DirecTV’s new satellites began transmitting signals using the MPEG 4/AVC digital compression format, to complement its established MPEG 2 system, to U.S. households in 12 major U.S. markets, the company said. DirecTV's current MPEG 2 HD package includes ESPN HD, ESPN2 HD, Discovery HD Theater, Universal HD, HDNet, HDNet Movies, TNT HD and HD Special Event for $10.99 per month. This football season, via its exclusive NFL Sunday Ticket package, the company aired more than 125 NFL games in HD. It also offers a HD pay-per-view channel, HBO HDTV and SHO HD. The premium channels in high-definition are included to subscribers to those services. Customers in HD local launch markets, who take a package that has local channels, will have the local HD added for no extra monthly programming fee. For owners of current equipment, DirecTV still offers all four NY/LA feeds in owned-and-operated (O&O) markets. However, under company agreements with the four major networks, customers in O&O markets will lose their distant network feeds after local HD channels become available in their area. DirecTV expects to offer the MPEG 4 HD local packages in 36 markets by April 2006, covering 57 percent of U.S. TV households. More markets were to be added throughout the year. Two more satellites are scheduled for early 2007 launch and will have the capacity for more than 1,000 additional local HD channels, more than 150 national HD channels and other new program offerings. The company sends four channels — ABC, CBS, FOX and NBC. New customers who signed up for the HD programming package received the dish and box for no charge, while existing customers paid $99 for a new dish and received a free HD box. DirecTV Slates Home Media Center
In support of its move to the MPEG-4 AVC compression system for new high-definition channels, DirecTV said it will introduce in 2006 a “Home Media Center” that will combine MPEG 2 and MPEG 4 reception with a hard-drive-based digital video recorder and home networking system. Designed to be a whole-house entertainment solution, the product will allow DirecTV customers to access content – including digitally-recorded video, digital photos and digital music – seamlessly from all TV sets in a home. It will include four tuners and will relay programming from the dish or from the hard drive to thin client receivers attached to TVs in other rooms. The system will support additional functions via its broadband connection.
DirecTV Adds National HD Channels
In 2004, DirecTV expanded its HDTV portfolio by adding the CBS, NBC, FOX and ABC national HD feeds in MPEG-2 format for subscribers living in markets with owned-and-operated network affiliate stations, or where over-the-air signals are not receivable according to FCC-approved measuring systems. The satellite provider also added national cable channel Bravo HD+ (the name was later changed to Universal HD). To bolster its strength as a provider of key sporting events, DirecTV added over 125 NFL games in HD via its exclusive NFL Sunday Ticket package.
EchoStar Expands HDTV Line-up
Dish Network offers a $9.99 per month rate for ESPN HD, Discovery HD Theater, TNT HD, HDNet, HDNet Movies, HBO HDTV, SHO HD, Dish on Demand PPV and CBS HD in 17 O&O cities (using WCBS in New York and KCBS from LA). In 2005, EchoStar purchased the hardware assets of Voom, Cablevision's ill-fated HD satellite system. Voom still exists as a programmer and Dish currently offers ten Voom HD channels for an additional $5 per month. New Voom channels will be added in 2006. EchoStar Plans Multi-room Receiver
Not to be outdone by DirecTV’s media center, EchoStar said it would introduce in 2005 a multi-room satellite receiver that records HDTV. The unit features two tuners that allow consumers to view independent programs – one in HD and the other in SD – on two TVs at the same time. The unit will include a 250-GB hard drive for 25 hours of HD recordings or 180 hours of standard definition recordings. HDNet Experiments with Content Mark Cuban's HDNet signed Steven Soderbergh to direct six films using high-definition which will be released “day and date” in theaters, in HDTV on the HDNet satellite and cable TV network, and in DVD all on the same day. It was the first series of films with simultaneous releases in movie history. Voom Changes to HD Programer
Voom, an HD-centric direct-to-home satellite service which launched in late 2003, collapsed in 2005 under pressure from investors. While the system no longer offers a direct-to-home satellite service to consumers, it is providing a package of special-interest high-definition television channels to other multi-channel video providers. In early 2006, only EchoStar’s DISH Network was carrying the Voom HD offering. EchoStar Announces Portable Satellite DVR In 2005, EchoStar offered what it called the first portable satellite DVR. The unit connects via USB to standard-size DISH DVRs to download a recorded movie in five minutes. Players are equipped with built-in 7-, 4- or 2.2-inch LCD screens, and 20-GB or 40-GB hard disc drives. DBS Continues To Add Local Channels Both EchoStar and DirecTV continued to add to their services local broadcast stations for retransmission into local markets. In 2005 DBS operators offered local broadcast television service in 167 of 210 television markets, covering 97 percent of all U.S. TV households. Under a 2001 federal must-carry mandate, the satellite providers were required to carry all of the local over-the-air channels in any market they chose to serve with local TV services. Previously, the providers only offered major network stations in the most populated markets. The two satellite TV carriers argued the must-carry mandate was a driving factor for the proposed merger. They say they would be hard pressed to expand services to all cities in the country without sharing their satellite spectrum. The addition of local TV stations to the DBS programming line-ups sparked new subscriber growth levels in the cities that received the local TV signals via satellite, when those services were first offered in 1999. The DTH satellite industry and CE industry won a major legislative decision that year when the Satellite Home Viewing Improvement Act (SHVIA) made it legally possible for satellite companies to carry local network TV broadcasts via satellite for local viewers. Congress Passes Extension to Satellite Viewer Act
In November 2004, Congress passed a five-year extension of the Satellite Home Viewer Act, which allows DBS operators to retransmit distant broadcast TV signals to underserved areas. The act also spelled out new rules for carriage of distant digital broadcast channels.
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