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Alan Breznick
Fresh off record monthly and yearly subscriber gains, DirecTV Inc. and EchoStar Communications Corp. are launching splashy new consumer promotions and gunning for even bigger customer increases in 1999.
The two high-power DBS providers unveiled the new promotions and a flurry of other marketing, programming and equipment deals at the Consumer Electronics Show (CES) in Las Vegas earlier this month. Buoyed by their unexpectedly strong growth in 1998, both companies see dish sales continuing to soar this year despite the continued rollout of digital cable.
DirecTV, the DBS leader with nearly 4.5 million subscribers, said it's shooting to pick up more than 1.1 million customers in 1999 after adding that amount last year. Capping off a strong holiday season, the company set a monthly record in December by signing up 183,000 subscribers and a seasonal record by signing up 400,000 subscribers for the fourth quarter.
"We hope to at least match, if not do better than, 1998," said a DirecTV spokesman. He predicted that the company will pass the 5 million subscriber mark in mid-year, around the fifth anniversary of its national launch.
More important to investors, DirecTV expects to become cash-flow positive by the spring after recording a $100 million operating loss last year. The spokesman said the company estimates it will post more than $2 billion in revenue this year, up at least 25% from $1.6 billion in 1998.
To stoke growth in the traditionally slow months of January and February, DirecTV and soon-to-be-acquired U.S. Satellite Broadcasting Co. are teaming on a joint promotion offering $200 of free programming to new customers. The campaign is DirecTV's most aggressive price promotion yet, coming a year after the provider offered new subs $100 in free programming.
DirecTV intends to follow up this campaign with a February/March promotion playing up its new NCAA men's college basketball tournament subscription package. It plans to announce the price of this package this week.
In other CES moves, DirecTv announced deals to incorporate Wink Communications Inc.'s interactive TV technology and TiVo Inc.'s TV-on-demand service into new satellite TV set-tops. It also announced its first agreement with a movie studio, New Line Cinema, to offer pay-per-view movies in high-definition television (HDTV) format.
EchoStar, approaching 2 million subscribers after less than three years, is aiming to add more than 1 million customers in 1999 to crack the 3 million mark. The company closed 1998 with a robust 900,000-subscriber gain after signing up a record 130,000 customers in December.
In the first half of the new year, EchoStar is counting on two major offers to push its numbers skyward.
First, the company has extended its free-hardware offer, introduced last fall with great success, to two new satellite receiver models. New subscribers can get full rebates for the $199 and $299 set-tops if they make a one-year commitment to Dish Network programming costing at least $48.98 a month.
Second, EchoStar has forged an alliance with Microsoft Corp.'s WebTV Networks Inc. to manufacture and market a combination Dish Network/WebTV box for $499, starting this spring. EchoStar officials think this high-end model alone could sell as many as 200,000 to 250,000 units.
"We'll probably highlight it as a traffic driver," said Scott Landers, director of customer acquisition marketing for EchoStar. "We're the only ones in the marketplace offering it."
Impressed by EchoStar's moves, some industry analysts predict that the DBS upstart will outgain DirecTV in several months this year. They also predict that DirecTV, despite the company's current protestations, will eventually match EchoStar's hardware rebates.
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