DirecTv Looks to Place Stamp on Hardware

Author:
Publish date:
Updated on

As part of a new strategic and equity deal with Thomson
Multimedia, DirecTv Inc. plans to incorporate its own logo on any new compatible equipment
produced by Thomson Consumer Electronics, the hardware giant's U.S.-based subsidiary.

Starting as early as this fall, consumers could start to
see the DirecTv brand on products ranging from high-definition television sets to digital
set-top boxes offering everything from multichannel video to Internet access.

"The business we're in is very brand focused,"
said DirecTv president Eddy Hartenstein. "If you look at the amount of branding and
advertising we do, it only makes sense to leverage off that."

To date, licensees of the Digital Satellite System
technology that DirecTv and Thomson co-developed have placed the DSS logo, as well as the
hardware vendor's own brand, on the direct-broadcast satellite hardware.

Hartenstein said that branding the hardware will let
consumers know at a glance that the devices they see at retail are DirecTv-compatible. He
likened the move to the successful "Intel Inside" branding campaign.

Such branding is likely to take on more significance as
Thomson and DirecTv start marketing new generations of digital receivers that are more
than DSS boxes.

In a memorandum of understanding between Thomson and
DirecTv, the two companies have agreed to distribute what Hartenstein called a new
generation of digital receivers. In addition to DSS capabilities, for example, one of the
first new platforms will offer interactive services such as data-enhanced video and
e-commerce applications.

More advanced receivers could add webcasting, software
downloads and even full Internet access, Hartenstein predicted. He said the companies will
also work together to introduce more high-end features like Dolby Digital, which Thomson
is already incorporating in new DSS models.

DirecTv is expected to make its much-delayed entrance into
interactive television sometime in the first half of next year. Hartenstein plans to have
more to say on the topic at the Consumer Electronics Show in January.

The company has been holding extra bandwidth aside for
interactive television services. Hartenstein said some of its programmers are already in
beta-testing mode on such services.

Hartenstein is confident consumers will be willing to pay
extra for some forms of interactive content. While business models have not yet been
finalized, Hartenstein said he expects DirecTv will employ a mix of subscription-oriented
and per-use fee structures.

The two companies will also co-market digital receivers
that combine local digital terrestrial signals with DirecTv's national programming.
Hartenstein said an integrated programming guide will make the joint platform virtually
seamless to subscribers.

And DirecTv has assurances from Thomson that every digital
television it sells in the U.S. will incorporate the DSS technology. Hartenstein pointed
out that Thomson is the No. 1 TV set maker for the U.S., "and that's by quite a
distance."

Hartenstein would not put a dollar figure on the 7.5
percent equity stake the company plans to take in Thomson. DirecTv is still undergoing due
diligence on the proposed deal.

Related