It was about 4 years ago when I predicted the demise of DirectTV, the largest satellite tv company and biggest rival to cable providers. I made the proclamation after seeing the new On Demand DVR’s that have since been rolled out to the masses (I lived in one of the initial test markets and was enthralled by the new technology). I hypothesized that in the end consumers would opt for digital cable because of the new On Demand technology in addition to the inclusive telecom bundles being offered by Time Warner, Comcast, and others that included phone, internet, and cable (or 2 out of 3).
4 years later I now think the opposite as Digital cable providers have stagnated in terms of product and service while DirectTV has revamped their offering. Below are three key differentiation points where DirectTV has seized a clear competitive advantage.
1) HD-
6 months ago regardless of who your cable or satellite provider was, HD content was not widely available. While cable companies have added to their HD lineups, the recent Direct launch of a new satellite which has added a wide assortment of HD channels has anointed DirectTV the HD king.
HD has their own group of enthusiasts who fiend for anything and everything in HD. Many of these enthusiasts have migrated to DirectTV or have recently relocated and have found this once difficult decision to be made a whole lot easier. In fact Direct TV grew its customer base by a net quarter million subscibers in 2006, with much of that growth attributed to their market leader status in HD content.
2) Sports Progamming
DirectTV has made it a priority to out pace the cable companies in available sports programming. Below are 3 examples
a) The widely popular NFL Sunday Ticket is only available on DirectTV. The Sunday Ticket and therefore DirectTV serves as the only option for displaced fans outside of their team’s television market as well as the only viable option for eateries, pubs, and other commercial locations that hope to attract patrons by having the total assortment of NFL football games. Direct TV not only makes extra revenue from this popular package ($$$$$$ for businesses who subscribe) but is now offering their Super Fan package for an extra $100 bucks to fans looking to view every single touchdown on a Sunday afternoon.
b) The NFL network. DirectTV was one of the first providers to pick up the NFL Network and was wise to do so as the once upstart NFL network now broadcasts some of their games on their increasingly popular cable channel. Last year cable providers who had yet to strike a deal with the NFL Network (some vow to never carry it) felt the wrath of multiple fan bases who were not able to watch late season showdowns that were showcased on the network. With no deal still in place with some of the largest cable providers, DirectTV stands to absorb a second wave of pissed off NFL fans.
c) With the help of DirectTV, the upstart Big Ten Network became the first cable network in history to be in 30 million households in their first 30 days. The big 3 cable companies have yet to join the party though and are losing subscribers at a fast rate to Dish Network, smaller cable companies, and Direct TV who do carry the network. Cities inside the Big Ten region include Chicago, Columbus, Cleveland, Cincinnati, Indianapolis, Detroit, and Minneapolis. The Big Ten also has the largest alumni base of any athletic conference thus extending the number of people who are steamed they cannot view their alma amateur’s athletic events on television. In fact the game of the year, Appalacian State vs Michigan was the Big Ten Network’s inaugural broadcast and was predicted by cable executives to be an example of the “second class” programming.
3) Customer Service
The cable company is notoriously known for having the worst customer service and product quality of any industry in the United States. In fact consumer reports place Comcast with the lowest customer service quality in the United States with Time Warner and others close behind. With high customer service internal turnover combined with hardware and network issues constantly irritating consumers, the cable companies are entrenched as US consumers number one foe.
While DirectTV gets mixed reviews for their customer service, the majority of subscribers swear by the companies ulta responsive customer service efforts. DirectTV is known to go to extreme in keeping disgruntled customers often throwing in premium channels, sports packages, lowered rates, or new hardware in exchange for a chance to “earn back your business”. This customer centric approach combined with a more robust and streamlined website has allowed DirectTV to retain customers at a higher rate while also appealing to customers like this lady who have found themselves at war with their local cable company.
Conclusion: Similar to US auto manufacturers, the big 3 cable conglomerates have some catching up to do. Instead of focusing on emerging market trends and consumer needs, these companies were too busy focusing on mergers and acquisitions rather than focusing on product and now find themselves with a more and more hostile customer base who are seeing added value in making the switch.
