CEO Says DirecTV Would Love to Go Over the Top

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NEW YORK — Just months after its bid for online video pioneer Hulu was rebuffed, DirecTV is focusing on developing its own subscription video-on-demand or over-the- top service, most likely one that would be targeted at so-called “millennial cord-cutters,” chairman and CEO Mike White told analysts and investors last week.

White has openly lamented the loss of Hulu, which canceled its auction in July after its owners decided to pump an additional $750 million into the company. White told the audience at DirecTV’s annual Investor Day meeting here Dec. 12 that he believed DirecTV could have brought some unique things to the Hulu party, including leveraging the satellite operator’s subscriber base in Latin America and the U.S., and possibly adding to Hulu’ s kids’ offerings.

The DirecTV chief said it is still premature to say how the satellite giant will address the OTT space but that, over the next three years, the company will be “looking at electronic sell-through, SVOD and over-the-top ideas.”

He added that the main hurdle to an OTT product was not technological.

“The technology is not the challenge,” White said. “It’s the [programming] rights landscape. I’m optimistic that probably over the next 12 months we will have more to say about that, in terms of our first priorities. We think it’s an opportunity.”

White estimated that consumers are spending about $5 billion in the OTT area, and that amount is expected to grow, especially among younger viewers who access more and more entertainment online.

While White sees a business in OTT, he isn’t so sure about putting an app for the top SVOD provider, Netflix, on his set top. The Netflix app was a hot topic in October, when Netflix CEO Reed Hastings said he would like to see the app on the set-tops of leading video-service providers like Comcast.

White said about 30% of DirecTV subscribers currently subscribe to Netflix as well, and it would not be technologically difficult to embed a Netflix app on DirecTV boxes.

“If the consumer demands it, we’ll be there,” White said, adding that customers so far aren’t asking for it. “It’s not necessarily in our interests to undermine our pay-per-view movie business, where we make nice margins, in order to help Reed [Hastings] out.”

White said DirecTV also is in active discussions with the National Football League about renewing its deal for the “NFL Sunday Ticket” out-of-market game package, which expires at the end of the 2014 football season.

“We have had very, very constructive conversations with the NFL,” White said. “I am very optimistic we will get an exclusive deal done with NFL Sunday Ticket. We still have a whole other season to go.”