Strategic Analysis of DIRECTV and DISH Network
DIRECTV (NASDAQ:DTV), established in 1994, provides digital television entertainment services through its subsidiaries and affiliated companies in the United States, India, Brazil, Mexico and other countries in Latin America. DIRECTV provides digital television service to 19.22 million customers in the United States and 8.85 million customers in Latin America. (DIRECTV, 2010). DIRECTV reported revenues of $24.1 billion in 2010 with net profit margin percent of 9.12. DIRECTV is composed of two main operating units - DIRECTV U.S., and Latin America, as well as DIRECTV Regional Sports Networks. As of December 31, 2010, DIRECTV U.S. had 19.22 million subscribers with average monthly revenue per subscriber, or ARPU, of $89.71. (DIRECTV, Annual Report, 2010) (Exhibit B). DIRECTV has strategically partnered with AT&T, Verizon, Qwest, CenturyLink, and Frontier to provide TV services bundled with phone and internet. DIRECTV’s mission is to provide customers with the best video experience in the United States both inside and outside of the home by offering subscribers unique, differentiated and compelling programming through leadership in content, technology and customer service. (DIRECTV, 2010) Differentiation Business Model
DIRECTV’s strategy is to pursue differentiation business model to sustain competitive advantage. It is the only Pay TV provider in Latin America and only provider to offer NFL sports package. DIRECTV’s geographic market of operations in Latin America, gives them opportunity for growth, as visible from the increased revenue growth for that segment. It is also exclusive provider of DISHA India channel in the U.S., catering to the needs of South Asian families in the US by offering spiritual, social and cultural programming. DIRECTV offers Differentiated and Exclusive Content Services, such as NFL SUNDAY TICKET, which allows subscribers to watch up to 14 games each week. They are also exclusive provider of NCAA- MEGA MARCH MADNESS. (DIRECTV, 2010) (Exhibit D) Investment in Technology
DIRECTV invests in technology innovation to differentiate from competitors and provide broader content and services to customers. They offer more 3D programming than their competitors do. In 2009, they solely broadcasted 3D program of MLB All-Star Game and U.S. Open Tennis Championship. DIRECTV has strategically collaborated with Panasonic to provide dedicated 3D TV channel, namely “n3D Powered by Panasonic”. DIRECTV has invested in technology and has strategically focused on “anytime, anywhere” experience to compete with new service providers available over Internet Protocol TV(IPTV). DIRECTV also offers Whole-Home DVR service and provide mobile apps, to browse shows, schedule recordings and set DVR from anywhere with any computer or phones. Evaluation of DIRECTV’s Strategies
DIRECTV captured First Mover Advantage in providing digital television entertainment services through satellites. They capitalized on the opportunity to lock consumers into their services, thus making it difficult for their competitors to break down the consumer base. In spite of capturing the first mover advantage, they are not in monopoly position anymore. Two years after their entry in the market, their main competitor “Dish Network” entered the market of providing digital television entertainment services as well. While DIRECTV is still ahead in ARPU with the advantage of being the first mover, DISH Network has also captured a significant subscriber base by providing similar services at a low cost. As per the resource based view, DIRECTV has utilized its resources and capabilities to gain competitive advantage over their competitors following differentiation strategy. DIRECTV has a distinctive competence in offering NFL sports package, which positions them uniquely in comparison to their rivals. Large subscriber base, leading brand name, most full time HD...
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