TV’s Sports Utility Vehicle

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When DirecTV Inc. launched the National Football League’s Sunday Ticket out-of-market package in 1994, it ushered in a new era of sports viewing in which fans had greater access and control over their viewing experience.

Fast forward to today, and DirecTV is still considered a preeminent television source for the avid sports fan. Whether through its unparalleled sports tier featuring most every regional sports network across the country, or its aggressive acquisition and promotion of marquee pay-per-view sports events, you’d be hard pressed to find many hard-core sports aficionados that don’t have a satellite dish on the roof.

“DirecTV is a sports utility — just like you take electric water and power for granted, you now take for granted that you can open up the spigot and receive an outpouring of virtually any sports programming from the sky,” says National Basketball Association executive vice president of strategic planning and business development Ed Desser.

GREATER ACCESS

Prior to DirecTV’s emergence, most pigskin fanatics or hockey buffs were limited to live game coverage of their local teams on regional sports networks or a handful of national games offered by broadcast networks and cable outlets like ESPN and Turner Network Television. At the time, cable lacked sufficient bandwidth to offer the multitude of channels necessary to watch as many as 14 National Hockey League games a night or the local sports report from more than 20 Fox Sports owned and affiliated regional sports networks.

The development of direct-broadcast satellite technology in the mid-1990s and its vast amount of bandwidth also allowed sports-content providers to offer more proprietary content to fans. Soon subscription packages from major sports leagues like Major League Baseball (MLB Extra Innings), NFL (Sunday Ticket), NBA (League Pass) and NHL (Center Ice) were created to offer viewers access to nearly every regular season game played within those sports.

“DirecTV was very anxious to launch a product that differentiated itself from what cable offered,” NFL senior director of broadcast operations and technology Peter Brickman says. “Cable was a pure analog environment, so they didn’t have the capacity to offer a digital service like NFL Sunday Ticket.”

For DirecTV, the packages became a valuable acquisition tool, appealing to sports fans that wanted to watch games from more than just their local sports teams. It also served as a major, exclusive content carrot, which DirecTV used to lure subscribers away from the more dominant cable industry.

“I would say sports was one of the most important and critical elements in DirecTV’s development,” says the DBS provider’s executive vice president of programming Stephanie Campbell. “It was a way for us to differentiate ourselves early on, because we had channel capacity in those early days that cable didn’t have.”

As cable began expand its channel capacity through digital cable upgrades it gained distribution rights to the out-of-market packages — sans NFL Sunday Ticket, which DirecTV holds exclusive rights to through the 2005 season. But DirecTV still generates the lion’s share of package revenue, according to league executives.

“DirecTV brought access to the sports fan that they never had before,” says The Carmel Group chairman Jimmy Schaeffler.

REGIONAL ADVANTAGE

But it wasn’t only out-of-market packages that helped DirecTV lure sports fans away from cable. The DBS provider also offers viewers exclusive access to programming from nearly all of the regional sports networks around the country as part of its ground breaking sports tier package.

The company’s sports tier offers 24 regional sports networks, as well as national niche services The Golf Channel, The Outdoor Channel, Fuel, TVG and Fox Sports World.

DirecTV also served as the launching pad for several basic niche sports services as NFL Network, NBA TV and College Sports Television (CSTV). Exactly how successful the platform’s tier of sports channels is unclear: Campbell won’t reveal specific penetration rates.

Sports event providers have also turned to DirecTV to maximize pay-per-view revenue for their respective shows. PPV event providers say DirecTV accounts for about 30% to 40% of an event’s total PPV event revenue despite representing only one-fifth of the PPV universe.

PPV executives say DirecTV’s financial and inventory commitment to marketing events has made it a performance leader in the category over cable.

“They are really the leaders when it comes to marketing PPV sports and subscription packages,” says ESPN senior vice president of national accounts, Western division Steve Raymond.

NEW TECHNOLOGIES

Just as sports content spurred DirecTV’s subscriber growth, so will it spur the company’s new technological innovations. Campbell says sports would play a major role in DirecTV’s interactive, broadband and high-definition plans in the near future.

She says DirecTV owner News Corp. is developing interactive applications related to its various sports offerings that will provide value-added services to its subscribers, although she would not provide specific details. (See interactive story page 54.)

But DirecTV has already a certain amount of interactivity has already been activated. Last year, DirecTV teamed with the NFL to download a highlights package of each week’s game to NFL Sunday Ticket subscribers with TiVo receivers. It also offered up-to-date statistics and game information to Sunday Ticket subscribers via its DirecTV.com Internet site.

Campbell says sports will be an integral part of DirecTV’s high-definition offerings in the future. The service currently offers ESPN HD, which Raymond says has worked well for both parties.

The service is also planning to offer several HD games from the NFL Sunday Ticket and NBA Full Court out-of-market packages.

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