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Few DirecTV Customers May Be in Supply for ‘Demand’

Jul 3, 2008  •  Post A Comment

It took about six months, but DirecTV finally returned Comcast’s salvo.
The biggest U.S. satellite television service, which has long touted its superiority in high-definition linear channels over cable companies, this week started offering its on-demand service. The move is part of DirecTV’s ongoing effort to take customers from cable television leader Comcast and other multichannel service operators.
DirecTV, which has more than 17 million subscribers, will offer more than 4,000 standard- and high-definition titles to customers with both a digital video recorder and a broadband Internet connection, the company said in a statement. “Thousands” of the titles will be free.
Customers also will have access to features such as their own home page on the satellite system and remote programming.
The new service follows by six months Comcast’s announcement that it was bolstering its on-demand service for its 24 million subscribers by providing more than 1,000 HD show and film choices a month by the end of the year. It also preceded by two days No. 5 U.S. cable company Cablevision’s announcement that it would add 15 HD channels by early next month.
Still, the broadband and DVR requirements may limit the success of the program because a relatively small percentage of DirecTV customers have the type of DVRs required for the service, according to Sanford C. Bernstein analyst Craig Moffett. Meanwhile, most customers’ Internet connections are through digital subscriber lines, not cable, which constrains bandwidth and is likely to lengthen the time it takes to download feature-length films, Mr. Moffett said.
“Training customers to expect VOD is a risky strategic gambit for DirecTV,” said Mr. Moffett, who has a “market perform” rating on the stock. “Count this as something less than a game changer.”

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