Competition Heats Up Between DBS, Cable

Lured by incentives, a significant number of digital broadcast satellite (DBS) subscribers will not remain customers after the promotional start-up and equipment offers expire. Information from a Leichtman Research Group, Inc. (LRG) December 2002 study indicates that 15 percent of DBS subscribers are likely to cancel their service in the next six months, while only 10 percent of cable subscribers report that they are likely to cancel service in the next six months.

Bruce Leichtman, president and principal analyst for LRG, attributes the 20 percent annualized churn to the vastly discounted offers from DBS operators, which create little barrier to entry, and therefore, little barrier to exit.

Despite the exodus, DBS operators EchoStar and DIRECTV reported a combined gain of over 1 million subscribers in the second and third quarters of 2002, while cable’s top ten operators reported a cumulative loss of over 500,000 television subscribers. During this period, DBS grew by acquiring 2.7 million new subscribers, overcoming the loss of nearly 1.7 million subscribers who disconnected their DBS service.

LRG also found that 69 percent of DBS subscribers who have had DBS for less than one year switched from cable, and 32 percent of current cable subscribers have investigated getting DBS, with over half of this group investigating DBS in the past six months.

“As the ability to expand the total number of video subscribers becomes increasingly limited, competition between cable and DBS intensifies,” said Leichtman. “The challenge for cable and DBS providers is to deliver a variety of services and packages that help to both attract and retain subscribers.”

The competition is sure to increase as findings from Strategy Analytics indicate that satellite-based digital TV is still the preferred choice of viewers, but not for long. The firm predicts that digital cable TV will surpass digital satellite in 2003, expecting 15.9 million U.S. homes will sign up to digital cable, compared to 15.4 million for digital satellite.

By 2008, Strategy Analytics forecasts 374 million homes around the world will be watching digital television, and since there are still a number of cable operators that haven’t converted yet, impatient TV-watchers are subscribing to DBS.

Strategy Analytics research indicates that North America and Western Europe dominate the digital market, accounting for 78 percent of digital TV homes in 2002, and the firm expected another 7.3 million European homes to acquire digital TV in 2002 – 58 percent will choose a satellite service, while 36 percent will opt for cable.

The Asia-Pacific region is gaining ground, where new digital satellite and cable services are launching or being planned. Strategy Analytics predicts that Asia-Pacific will account for 28 percent of the world market by 2008.

“China remains the unknown factor,” says Peter King, director of the Strategy Analytics Broadband Device Strategies service. “If aggressive plans to upgrade China’s 100 million cable homes are implemented, the Asia-Pacific market will undergo a fundamental shift over the coming years.”


Worldwide Digital TV Households
2000 2001 2002 2003 2004 2005 2006 2007 2008
Number of households (Millions) 54.9 76.7 103.3 135.8 175.2 221.5 272.2 324.4 374.0
Note: includes all digital TV platforms – terrestrial, satellite, cable, DSL and other
Source: Strategy Analytics

Related reading

nurcin-erdogan-loeffler_wikipedia-definition-the-future_featured-image
pwc_experience-centre_hong-kong_featured-image
12919894_10154847711668475_3893080213398294388_n
pokemon go
<