Overview of the Company
DIRECTV is one of the world’s leading satellite TV providers with over 20.4 million customers in the United States and 16.32 million customers in Latin America. It was founded and built by a former aerospace engineer, Eddy W. Hartenstein. He was working at Hughes Electronics as a defense contractor and satellite maker where he was also developing the “idea to use satellites and digital technologies to deliver television programming to people’s homes” (Eisenberg, 2008). Pioneering the development of satellite television, DIRECTV launched its service in 1994; the same year of the development of direct broadcast satellite (DBS) technology which allowed “households to receive hundreds of channels. The DBS satellites operate from orbits directly above the earth’s equator and just over 22,000 miles up” (Turow, 2014, p 375).
With the DBS technology, DIRECTV developed its distinct feature which led to the expansion of its business by replacing the large TVRO satellite dishes with “minidish,” which provided clearer digital video and audio (Somodi, Hathway, Helmer, 2006). Today, DIRECTV is home to premium networks such as HBO, SHOWTIME, and Cinemax (Company Profile, n.d)
By the end of 1995, DIRECTV became the leading satellite TV provider with more than a million subscribers (Somodi, Hathway, Helmer, 2006). Today, it has three corporate offices in California, New York, and Colorado. Number of employees including part-time is up to 31,500 nationwide (Company Profile, n.d).
In July 2015, AT&T acquired DIRECTV for $49 billion which led to an increase in its employees up to 275,000. With the acquisition, AT&T has access to DIRECTV’s “existing content at a time when AT&T has made video services a priority and helps get AT&T into new markets like video and data services inside airplanes” (De La Merced, 2014). The acquisition broadens AT&T’s reach nationally and creates a pay-TV giant that can offer video through satellites, which is called U-Verse (Yu, 2014).
While DIRECTV is looking to acquire a subscription video-on-demand services like Hulu, DIRECTV’s biggest primary competitor and the other largest DBS company in the U.S., Dish Network, is looking to become a wireless provider.
Partnerships
Over the years, DIRECTV has partnered with large companies such as Common Sense Media, a company that “offers a database of parental rating information;” IMDb, the “premier source of entertainment information;” WordPress, the “leading online publishing platform;” and Gracenote, the “leading provider of entertainment data and technology” (Content Partners, n.d).
Marketing and Promotion
DIRECTV has used many strategies to increase its subscriber base: providing exclusive packages to its subscribers, creating commercials that compare smart people that use satellite TV to “dumb” people that uses cable, and motivating current customers to recommend its services to friends.
To market its exclusive packages like NFL Sunday Ticket, which broadcasts NFL regular season games that are unavailable on local affiliates, DIRECTV has developed a campaign called “Don’t Be Like This Me.” One of DIRECTV’s most successful campaigns, “Don’t Be Like This Me” has partnered with athletes to promote the NFL subscription service (Mercer, 2015). Another successful marketing plan that DIRECTV has developed is allowing its customers to purchase tickets to exclusive concert events such as Super Saturday Night, which has featured worldwide stars such as Rihanna, Katy Perry, and Beyoncé over the years (Brugnoli, 2015). This campaign particularly targets the young population to purchase a subscription.
Additionally, AT&T has also started to offer unlimited data to 15 million households that have subscription to DIRECTV but not to AT&T wireless; and 21 million households that already have AT&T wireless but no subscription to a satellite/cable TV in an effort to cross-promote the two companies (Stelter, 2016).
To create awareness and promote its business even more, DIRECTV sends out e-mails to 80% of the million Affiliate Marketer’s email addresses and the remaining 20%, who did not provide an email address, receive a direct mail piece. It encourages them to create an account to start promoting DIRECTV. It owns an online affiliate program to track referral progress and encourages participation by offering a chance to win a lottery.
DIRECTV focuses on its current subscribers to gain a larger subscriber base. To attract new customers, DIRECTV has come up with the idea of creating Refer-A-Friend program for current subscribers to participate in. It is a mobile application that encourages subscribers to refer their friends in order to receive savings codes and benefits from the referral program. Since 39% of individuals aged between 20-37 are digitally active on multiple devices, DIRECTV creates digital promotional campaigns on mobile apps and social media to target its desired market. Reason for targeting the millennial generation is because it is the largest share of U.S. population of 80 million people (Neel, 2014, p 3-5). DIRECTV’s other strategic promotion plan of attracting a younger generation of people who hasn’t settled down for good yet is to provide sponsorships to college events. For example, DIRECTV sponsors Syracuse University’s annual music festival, Juice Jam, to promote its services to the younger generation.
In a competitive market of video-streaming services led by Netflix, DIRECTV has also launched a streaming service for its U.S. Hispanic subscribers and consumers in Latin America. It has introduced a video streaming service called “Yaveo” which is believed to boost DIRECTV’s overall revenue (Team, 2014).
Business & Revenue Models
To survive in the competitive TV industry, DIRECTV seeks to increase its subscriber base while competing with cable TV providers. According to a research, “in 2010, about 60 percent of U.S. household with a TV were hooked up to a cable service, 7 percent got TV through telco services, and 33 percent subscribed to a satellite operation” (Turow, 2014, p 375). Compared to cable TV, DIRECTV offers movie-quality audio and picture display with hundreds of channels through digital broadcasting.
As the provider, DIRECTV doesn’t create original programming itself; it pays other content providers such as ESPN or HBO for the right to broadcast their content via satellite. After making a deal and getting permission to distribute content, DIRECTV receives signals from these programming sources. The dishes that are installed in customers’ houses receive these signals from the satellites and pass it on the receiver in the viewer’s house (Nice, Harris, 2002).
To run the business of above mentioned operations, DIRECTV receives monthly revenue per subscriber in the range of $19.99 up to $89.99. The revenue generated by the subscription deals and packages, DIRECTV covers its expenses of operation. According to DIRECTV’s 2014 Full-Year Report, the operating costs and expenses includes broadcast programming, subscriber service expenses, broadcast operations expenses, upgrade and retention costs, merger-related costs, etc (Sheehan, 2015).
References
About Us : Company Profile. (n.d.). Retrieved February, 2016, from http://www.directv.com/DTVAPP/content/about_us/company_profile
Brugnoli, C. (2015, January 15). Fifth Annual DIRECTV Super Saturday Night to Feature Rihanna. Retrieved February, 2016, from http://investor.directv.com/press-releases/press-release-details/2015/Fifth-Annual-DIRECTV-Super-Saturday-Night-to-Feature-Rihanna/default.aspx
Content Partners. (n.d.). Retrieved February, 2016, from http://www.directv.com/DTVAPP/content/partners/content_partners
De La Merced, M. J. (2014, May 18). AT&T to Buy DirecTV for $48.5 Billion in Move to Expand Clout. Retrieved February, 2016, from http://dealbook.nytimes.com/2014/05/18/att-to-buy-directv-for-48-5-billion/?_r=0
Eisenberg, C. (2008, August 18). DirecTV mastermind Eddy Hartenstein named publisher in Los Angeles. Retrieved February 20, 2016, from http://news.muckety.com/2008/08/18/satellite-tv-mogul-eddy-hartenstein-takes-helm-of-los-angeles-times/4612
Mercer, R. (2015, July 27). DIRECTV Continues Popular ‘Don’t Be Like This Me’ Campaign with NFL All-Pros to Promote NFL SUNDAY TICKET. Retrieved February, 2016, from http://investor.directv.com/press-releases/press-release-details/2015/DIRECTV-Continues-Popular-Dont-Be-Like-This-Me-Campaign-with-NFL-All-Pros-to-Promote-NFL-SUNDAY-TICKET/default.aspx
Neel, A. (2014). An Integrated Marketing Communications Plan. Retrieved from http://katieshive.com/wp-content/uploads/2014/12/MKT-495-IMC-Campaign-FINAL-REVISED.pdf
Nice, K., & Harris, T. (2002, May 30). How Satellite TV Works. Retrieved February, 2016, from http://electronics.howstuffworks.com/satellite-tv.htm
Sheehan, M. (2015, February 19). DIRECTV Announces Fourth Quarter and Full Year 2014 Results. Retrieved February, 2016, from http://investor.directv.com/press-releases/press-release-details/2015/DIRECTV-Announces-Fourth-Quarter-and-Full-Year-2014-Results/default.aspx
Somodi, C., Hathway, J., & Helmer, E. (2006, April 12). Strategic Report for DIRECTV. Retrieved from http://economics-files.pomona.edu/jlikens/SeniorSeminars/pandora/reports/directv.pdf
Stelter, B. (2016, January 11). AT&T offers unlimited data if you subscribe to DirecTV. Retrieved February, 2016, from http://money.cnn.com/2016/01/11/media/att-directv-unlimited-data/
Team, T. (2014, December 26). DirecTV Launches Over-The-Top Streaming Service For U.S. Hispanic Consumers. Retrieved February, 2016, from http://www.forbes.com/sites/greatspeculations/2014/12/26/directv-launches-over-the-top-streaming-service-for-u-s-hispanic-consumers/#ede59d57cd89
Turow, J. (2014). Media today: Mass Communication in a Converging World (5th ed.). New York, NY: Routledge.
Yu, R. (2014, May 19). AT&T buys DirecTV for $48.5 billion. Retrieved February, 2016, from http://www.usatoday.com/story/news/usanow/2014/05/18/att-buys-directv/9247795/