Following a set-top distribution model similar to that of parent Cablevision Systems Corp. and other cable MSOs, Rainbow DBS's Voom is offering customers the option of leasing its HDTV set-tops.
The new offer, which the direct-broadcast satellite provider began to market last week, gives subscribers the choice of leasing the set-top for its HDTV programming service for $9.50 per month. Voom is also waiving the $199 installation fee for those who sign up before May 31.
For consumers that choose to buy the Motorola Inc. HDTV set-tops rather than lease them, Voom has cut the price of the boxes from $749 to $499. Rainbow DBS executive vice president Bill Casamo said that the company will have to spend more to subsidize the costs of the set-tops for customers who buy the boxes.
In addition, by allowing Voom customers to lease the set-tops, he said the company's costs would also increase.
"It's potentially a big capital expense, but if you're getting the right revenue per subscriber and [reducing] churn, then that's something that's financeable," Casamo said.
Voom hasn't charged customers for its programming packages since it debuted in October, but Casamo said new subscribers will have to pony up. Its package of high- and standard-definition channels costs $79.90 per month.
Programming payments for subscribers who bought the service under previous offers begin April 1.
Casamo said Voom crafted the new set-top offers after testing several price points over the last two months with customers who ordered the service through the company's Web site or responded to the direct-mail campaigns Voom sent to HDTV owners and likely HD purchasers.
"This is really the official launch of the business," Casamo said. "We're putting far more marketing into it."
Casamo said that he wasn't sure how much Voom will spend on its marketing efforts.
Voom plans to tout the pricing structure through newspaper and magazine ads, direct-response television commercials, as well as through a campaign tied to the Academy Awards. Voom teamed up with Samsung Electronics to give Academy Award presenters at the Feb. 29 Oscar ceremony free HDTVs and 12-month subscriptions to Voom's HDTV programming service.
The new offer also comes as Voom expands its programming lineup. Last week, it cut a deal with Home Box Office to carry the high-definition versions of HBO and Cinemax, in addition to several standard-definition HBO and Cinemax channels. It also signed an agreement with Turner Broadcasting System Inc. to carry Cable News Network, CNN Headline News, CNNfn, TBS Superstation, Turner Classic Movies, Cartoon Network, Boomerang and Turner Network Television. Casamo noted that Voom expects to carry TNT HD when it launches in May.
While Sears is the only retailer that presently offers Voom on its shelves, Casamo said Rainbow DBS is talking to other chains about distributing the HDTV service.