DirecTV’s Pre-Emptive Strike

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Las Vegas— DirecTV Inc. is ratcheting up efforts to give consumers TV when they want it, wherever they want to watch it — even shows that have not yet aired in primetime.

The satellite-television provider cut a deal with Fox Cable Networks Group’s FX to allow subscribers to download first-run episodes of primetime hits such as The Shield and Rescue Me for $2.99 each to a digital video recorder, before they air nationally. “I think this is the first time this has been done in the industry,” News Corp. president Peter Chernin said at a press conference at the International Consumer Electronics Show here on Jan. 5. News Corp. owns FX and a 34% stake in DirecTV, the biggest U.S. satellite-TV provider with about 15 million subscribers.

DBS FIRMS TOUT CHOICE

The pre-primetime deal was just one in a string of announcements by the distributor that are designed to give subscribers more ways to view a network’s content than simply watching pre-ordained schedules.

DirecTV and No. 2 direct-broadcast satellite provider Dish Network, are both trying to show consumers they can offer more than just dozens, scores or hundreds of channels to watch.

They want to show they can offer consumers choice and flexibility in how they can use that content — in some ways playing catch-up to cable’s more advanced on-demand video offerings.

At CES, DirecTV also unveiled plans to:

  • Roll out “DirecTV 2GO,” a service that will permit subscribers to transfer programming from their DirecTV Plus digital recorder to a variety of portable media players.
  • Let subscribers view and use DirecTV programming stored on Windows-based PCs in a variety of ways, even allowing the transfer of that content to Xbox video-game consoles, in an effort with Microsoft Corp. that was likened to “bridging islands of content” by an executive with the software giant.
  • Integrate DirecTV receivers into LCD TV screens.

Referring to the giant CES confab, Chernin asserted the “big untold story of this show is finally we’re really seeing the coming together of the content business, the technology business and the CE business.”

This has tremendous ramifications for programmers, Chernin said, “as we approach what we look at as nirvana, which is the world of, sort of, our content available anytime, anywhere, on any device.

“That really is, I think, the key priority for us at Fox, how do we take advantage of all these new distribution opportunities,” Chernin added.

So, too, with DirecTV. Starting in March, subscribers with DirecTV’s new DVR set-top will be able to see primetime hits from FX anywhere from 24 to 48 hours before their initial broadcasts for $2.99.

Later in the year, subscribers will have on-demand access to about five shows from News Corp.’s Fox broadcast network, such as 24 and Prison Break, for six to seven days after their initial broadcast for 99 cents a download.

The third leg of the Fox Entertainment-DirecTV on-demand pact will be the creation of a weekly showcase of “best-of” Fox highlights, which could include behind-the-scenes footage.

“All this technology leads to two things for consumers: greater choice and greater control,” Chernin said.

The deal permits News Corp. to lend a helping hand to DirecTV, which it partially owns. The unique VOD offering may help drive distribution for the DBS provider’s new DVRs, DirecTV Plus DVR.

DirecTV, which is ending its relationship with TiVo, is trying to convince subscribers to switch to its own branded DVR receiver. Having a VOD offering will be a potential lure to subscribers.

At the press conference, DirecTV president Chase Carey described the FX and Fox on-demand offerings as “our initial [video-on-demand] package.” He said the direct-broadcast satellite company “will continue to build upon the offering.”

“The initial offering will be a mix of TV shows, movies, news and sports.” Some will be pushed to the device [the DVR set-top], some will be more of a menu,” Carey said.

As part of its VOD platform, DirecTV last year crafted an agreement with NBC Universal that permits it to offer shows from channels such as USA Network and Sci Fi Channel within hours after they air, stripped of ads, for 99 cents.

The satellite services have been hampered by their inability to take instructions from their users, over their networks. It’s easy to broadcast signals to lots of users from a satellite miles above the earth; but not easy to get signals from individuals back up.

When questioned about how the Fox on-demand offering will be made available, Carey said that the FX and Fox programming in an encoded form will be “pushed” into the new DVRs.

He also made much of the additional interactive abilities the new set-tops will give DirecTV.

With its DirecTV 2Go player, DirecTV unveiled its plans after the other DBS provider, in terms of taking advantage of “portability.”

Late last year, EchoStar Communications Corp. unveiled its rollout of PocketDish, a device that allows subscribers to transfer programming, for free, from their TV, set-top or VCR to the device. PocketDish can also store photos, carry music files and pre-loaded games.

DirecTV 2Go, debuting mid-year, will let subscribers transfer content from DirecTV Plus DVRs to a variety of portable media players.

ERGEN ON DEMAND

At EchoStar’s CES press conference, EchoStar chairman Charles Ergen addressed the issue of DBS’s lack of a two-way network, defending it against cable’s delivery of programs on demand to customers.

“We have on-demand,” Ergen said. “We do it in a different way. This is hard for the press to understand. … We haven’t done a very good of marketing video on demand yet.”

With EchoStar’s digital recorder, a subscriber can with one button program it to record 180 hours of Desperate Housewives, or “wait for Comcast to have it and pay 99 cents or Apple for 99 cents,” Ergen said. (Comcast has an agreement with CBS to let subscribers buy 99-cent downloads of shows like CSI: Crime Scene Investigation and Apple Computer Inc. has a deal with Disney to downloads ABC hits onto iPods.) Or a Dish subscriber can download Desperate Housewives from their DVR and watch it on a PocketDish while riding on the subway.

“We think that’s a better mousetrap for the American public,” the EchoStar chairman said.

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