DIRECTV and the NFL Renew Content Partnership through 2014

| Mar 25, 2009 | Digital Home - U.S. | Competitive Intelligence Report

| Analyst: Bruce McGregor

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

March 23, 2009 -– DIRECTV and the National Football League (NFL) finalized a new agreement, allowing DIRECTV to continue with the NFL SUNDAY TICKET package through the 2014 season. This sports package gives DIRECTV subscribers exclusive access to all the NFL’s regular season games where as cable and telco pay TV services only offer local market games. Under the new agreement by 2012, consumers unable to receive DIRECTV will be given the opportunity to access NFL SUNDAY TICKET via a broadband connection. Also DIRECTV’s Red Zone Channel that shows cut-ins to live games with scoring opportunities will be made available to cable, telco, DISH Network and wireless phone customers by 2012.

Analytical Summary

• Current Perspective: Positive on DIRECTV to continue its deal with the NFL because its NFL SUNDAY TICKET sports package has proved to be a lucrative offering, especially since no other video provider can match its access to all the NFL regular season games. NFL fans -- particularly those with a loyalty to a team on the other side of country, all crave complete access to all the games so they can guarantee they don’t miss games played by their favorite teams. There are not many examples of a service provider holding exclusive access to premium video content, as DIRECTV rivals can only broadcast a few live NFL games each week, which are usually focused on local teams. Meanwhile, DIRECTV lets subscribers view any regular season NFL game regardless of where it is being played. DIRECTV’s NFL package creates leverage over its competition by persuading consumers to switch to DIRECTV in order to watch more NFL content.

• Vendor Importance: High to DIRECTV because its rights to all regular season TV broadcasted games have proved to be a substantial advantage over the cable providers. In fact, cable companies like Time Warner Cable and Charter have been perceived by consumers not to be the best supporters of NFL content with them not even offering their subscribers the NFL’s 24 hour channel due to a contract dispute. The NFL Network channel in addition to NFL news and commentary has begun to broadcast a few regular season games exclusively. DIRECTV has successfully branded itself as the premier service provider for NFL content and, in addition to broadcasting all regular season games, it invested in providing the NFL Network, the Red Zone Channel, SUPERCAST with live streaming of games to a computer, and the Game Mix Channel broadcasting up to eight live games on a single screen.

• Market Impact: Moderate on DIRECTV competitors because they need to be aware of the lost hope the NFL would free up its exclusive agreement with DIRECTV to make the NFL SUNDAY TICKET also available on other pay TV systems like Time Warner Cable and DISH Network. DIRECTV will keep and continue to poach cable customers that decide they want full access to NFL games. Ultimately though, cable can still overshadow DIRECTV by selling three services included with their triple play packages of digital cable TV, broadband and wireline voice.

Recommended Competitor Actions

• DISH Network offers video content similar to that of cable providers and DIRECTV, and its looks like the two satellite providers will have HD parity with soon 150 HD channels. To get an edge in the market, it needs to create exclusive programming rights with popular content providers, much like what DIRECTV has done with its NFL package, offering out-of-market regular season games.

• Cable providers need to highlight that satellite TV reception can be distorted due to heavy rain or snow, often called rain fade. DIRECTV requires a satellite TV dish to be installed on a customer’s roof, which can be perceived as an eyesore, and reception with the Southern sky can be blocked by low-hanging trees or nearby buildings.

Recommended End User / Customer Actions

• For the diehard NFL fan, DIRECTV’s NFL SUNDAY TICKET is a must-have to ensure they are able to watch every play of regular season games. DIRECTV is offering an early bird special with a $20 discount for those DIRECTV customers willing to sign for the sports packages months in advance. The promotion offers NFL SUNDAY TICKET for five monthly payments of $55.99 a month.

• Digital home consumers that are unable to get DIRECTV because of environment issues like being in an apartment with no dish access to the Southern sky can appeal to get NFL SUNDAY TICKET through the Internet starting in 2012.

• Customers that want to buy their communications services from one provider and be eligible for service discounts should consider buying DIRECTV through one of the major incumbent local telephone companies (including AT&T, Qwest, and Verizon) that include it in their bundled packages. They should also compare the cost of voice, Internet, and programming bundles from a telephone service provider to a similar package available from the local cable operator.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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