Cable Operators

DBS Ups the Ante With New Tech

1/09/2005 7:00 PM Eastern

Las Vegas— Aiming to lure more cable subscribers to satellite, DirecTV Inc. and EchoStar Communications Corp. unveiled new arsenals of technology here last week.

New offerings ranged from digital video recorders equipped with caller-ID technology to portable media players and ITV services.

EchoStar drew the ire of some cable executives who attended the Consumer Electronics Show, announcing plans to roll out a video-on-demand service in March.

Unlike the VOD offerings from cable MSOs such as Comcast Corp. and Time Warner Cable — which distribute content to customers via servers located at headends — EchoStar’s VOD service will run on new satellite receivers that can digitally store 200 hours of content. EchoStar will download 100 hours of pay and free movies and television programs to Dish Network subscriber set-tops automatically. Customers can also record 100 hours of content on their own.

“I do think that video-on-demand is a popular product with customers once they get used to it, and I think that we would be remiss if we were to have cable be the only [platform] that has video on demand,” said EchoStar chairman and CEO Charlie Ergen.

EchoStar is taking a shot across the bow of the cable industry by placing DVR and VOD content in the same boat.

Cable operators, which continue to lose basic subscribers to DirecTV and EchoStar, have used their ability to offer customers hundreds of hours of VOD content as a key competitive differentiator. VOD has also been the central focus of the cable industry’s “Only Cable Can” campaign.

“I think what they [EchoStar] are trying to do is confuse the consumer, and therefore they don’t look as disadvantaged as they really are, because it’s not true video-on-demand,” said Cable One Inc. vice president of strategic marketing Jerry McKenna.

Added Cox Communications Inc. senior vice president of strategy and product development Dallas Clement, “Why would they call it video-on-demand, if not for purposes of trying to fool [subscribers]?”

Ergen said EchoStar’s VOD service will offer both pay and free content.

The company was still finalizing how it would determine which free basic cable or broadcast shows it would download automatically to its new DISH Player-DVR 625 receiver. EchoStar may monitor the viewing habits of subscribers that agree to be tracked in order to determine which shows to offer, said Ergen.

POPULAR DOWNLOADS

He said the company may also simply upload the most highly rated programs to the DVRs, citing ABC’s Monday Night Football as an example.

“We can combine on one set-top box kind of the best of what’s on satellite, along with what you the consumer wants to record. It’s a little different approach from the cable guys, where they’re picking what you watch in your house.”

Once downloaded to a DVR, pay movies may reside on the set-tops for a few weeks. But files will be automatically erased from set-tops 24 hours after subscribers purchase a piece of content, Ergen said.

Both DirecTV and EchoStar touted new ITV services, portable media players and multiroom DVRs at CES — three technology offerings that haven’t yet been deployed by most cable operators.

EchoStar said it would soon launch an interactive shopping channel that will allow customers to buy products from The Sharper Image with a click of a remote.

The DBS firm is also launching Gemstar-TV Guide International Inc.’s TVG horseracing channel, and said it will collect bets from subscribers that live in states that allow remote gambling.

And EchoStar is also rolling out a “karaoke channel,” which will let customers sing along with songs and lyrics displayed on their television.

DirecTV also took the wraps off of three new interactive mosaic channels — Newsmix, Sportsmix and Kidsmix — which allow subscribers to view multiple networks from the same genre on a single screen.

Since the late 1990s, cable operators have talked about using the industry’s two-way architecture to offer customers ITV and shopping services, but have focused instead on deploying DVRs, VOD and bundled high-speed data and telephone service packages.

ITV’S NO SLAM DUNK

Some cable executives said deployment of ITV shouldn’t necessarily be a priority.

“There’s no proof that consumers are crying out for interactive. It’s still a sales job to convince them that they want or need that,” said Cable & Telecommunications Association for Marketing CEO Char Beales.

DirecTV drew a lot of attention in Las Vegas last week with its new DirecTV DVR, which it said will become commercially available in mid-2005. The interactive DVR offers onscreen caller ID and a “viewmarks” feature, which will allow subscribers to mark favorite places in shows recorded on the DVR.

The DVR also contains a “record now, pay later” feature, which will allow subscribers to store pay-per-view movies on the receiver and only pay for the programs they watch.

DirecTV added new advanced-search functions to the DVR, which will allow viewers to search for content according to program title, genre, actors, directors or keywords in upcoming shows or programs they’ve already recorded.

VAGUE TALK ON TIVO

DirecTV Inc. executives faced several questions last week about the company’s distribution agreement with TiVo Inc. New DirecTV CEO Mitchell Stern offered vague responses about whether the company would continue to market TiVo-branded DVRs, or if it would focus on the new DirecTV DVR, which was developed by News Corp. corporate sibling NDS Group plc.

“We’re going to work with as many people and as many companies we can to make sure we get the best product out to everybody,” Stern said at a DirecTV press conference on Thursday, adding that he planned to meet with TiVo president Mike Ramsey later that afternoon.

Asked to clarify DirecTV’s commitment to TiVo, Stern responded, “You have to take exactly what I said and you have to take it with every ambiguity it was intended to relay.”

EchoStar executives discussed their relationship with one of their partners last week — SBC Communications Corp. Ergen said EchoStar is open to the idea of reworking its distribution deal with SBC as the telco expands its fiber-to-the-curb video offering, but only if it’s beneficial for the satellite provider.

September