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DIRECTV Announces Second Quarter 2012 Results

Discussion in 'DIRECTV General Discussion' started by DodgerKing, Aug 2, 2012.

  1. Aug 4, 2012 #81 of 101
    ChicagoBlue

    ChicagoBlue Godfather

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    OK, since you offered. :lol:

    The problem I see with a number of viewpoints here at DBS Talk is that they simply do not understand business, especially this business. They simply don't.

    DTV used to be in a mode of acquiring customers where they would spin up the marketing machine, go after a large swath of customers and pull in gobs of them. Then, over the years as churn increased with deadbeats that don't pay their bills, they tightened who they would go after and churn lowered. In the last few years, with most new cusotmers going HD, all the additional technology, broadband infrastructure, labor costs, etc, the cost to acquire these customers is very high, north of $850 in many cases.

    So they made a strategic change to pull back on who they go after, yet I hear really simpleton things (you didn't say this, but others have) that they shouldn't want to lose any customers. That is so naive it is almost sad that people say this. I would expect Swanni to come up with one of those gems.

    The reality is there are a lot of deadbeat customers in the US and DTV has their fairshare like any other business. Customers that try to get a deal all the time, late on their bills, don't pay often, claim service is out when it isn't, etc, etc, etc, etc. These people are not worth having. In talking to one of the DTV guys at this Fox conference I was at, they lost some subscribers in the Viacom dispute but most of them were what they call low value customers. Many organizations put metrics like lifetime values of a customer, a way to determine how much money they are worth. Each customer is different and it is a very important metric. If you are spending $850 to bring in a customer, you better be bringing in a customer with a lifetime value much greater than that to make a profit.

    Right now, DTV is more than happy to lose the deadwood and the deadbeats. I'm sure that sounds nasty and mean, but all businesses worth their salt have to do this when they are out of growth mode. With profit margins less than 10% per year and operating margins decreasing every year due to programming costs, they are going to be interested in signing up a high end customer only and if a low end customer is threatening to leave, wish them well and tell them goodbye.

    That is what is going on right now and it is a smart business strategy. The deadwood brings down their customer service levels because they are high maintenance customers, they also tend to subscribe to low margin packages which makes them not very profitable.

    Think about it this way. DTV spends $850 to bring someone in. If they pay DTV $75 a month with operating margins of only 50%, that takes two years for them just to break even. No profit, just to break even, that's assuming no customer issues, no credits given out, no service calls, etc. If there is a group of customers they can identify that they know are simply not worth spending additional money to keep around - LET THEM GO. In the long run, they are way better off.
     
  2. Aug 4, 2012 #82 of 101
    ChicagoBlue

    ChicagoBlue Godfather

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    :rolleyes:

    You clearly have no idea what you are talking about, especially since fiber isn't building out right now because their costs are so out of control. Good try though, maybe on planet xeon where this is happening, but not on planet earth or in the USA. And please, don't point to Google in KC, that is nothing more than a stunt. They have no plans to push that nationally because the costs do not justify it. Not going to happen.
     
  3. Aug 4, 2012 #83 of 101
    ChicagoBlue

    ChicagoBlue Godfather

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    Good luck with that Gloria. The fact of the matter is that ESPN's deals across all distributors require a penetration rate of about 85% to 90%, meaning that they must be included in just about every package.

    There is no distributor that is going to stand up to them because it would be suicide. There is nothing to "solve" because it is unsolvable without committing suicide. Pretty simple.
     
  4. Aug 4, 2012 #84 of 101
    ChicagoBlue

    ChicagoBlue Godfather

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    Take a stand big guy, drop them. You deserve the best, most premiest product out there. :lol:
     
  5. Aug 4, 2012 #85 of 101
    lparsons21

    lparsons21 Hall Of Fame

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    Both Dish and Direct have indicated they are more interested in that better customer. The one that gets much more than just basic TV, has few customer service issues and pays their bills on time. And that makes good business sense and explains why even with loss of net subs, profits have been better.

    The downside is that the general press makes a big deal out of net loss of subs because that is good news for them because they have something simplistic to report on. And since they perceive it as a negative, it is 'good news'!

    That said, I don't consider D* to be any more premium than E*. I see them as 2 sides of the same coin. One with a bigger emphasis on sports, the other a more generalized viewing market. And I see both doing a good job of it. Not perfect, and I've complained about both at different times. But overall, I've had good experiences with both most of the time, with that occasional glitch that just irritates.
     
  6. Aug 4, 2012 #86 of 101
    Alan Gordon

    Alan Gordon Chancellor

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    Actually, you didn't criticize me at all... :D

    I know multiple businesses that have turned business away due to the amount of money they'd get back, the hassle, and multiple other considerations. I was not doubting Satelliteracer or DirecTV's words that this (maybe not the exact number, but close enough) was on purpose.


    ~Alan
     
  7. Aug 4, 2012 #87 of 101
    zimm7778

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    If the day comes that NFL Sunday Ticket is available on FIOS or in some sort of true mobile way like MLB.tv and NHL Gamecenter, that will probably be my last day with Directv. That's the one final straw holding me to them.
     
  8. Aug 4, 2012 #88 of 101
    Sgt. Slaughter

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    If strategy is shifting to a higher class so to say then things that are broken need fixing....*cough*DIRECTV android app streaming not working on high res devices like HTC EVO LTE and others.... *cough*

    Just saying to shift to higher spenders, things will be expected to work even more so than before...
     
  9. Aug 4, 2012 #89 of 101
    sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    It's available PS3.
     
  10. Aug 4, 2012 #90 of 101
    Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Winters,...
    Actually, it makes perfect business sense, and DIRECTV® isn't the only one hewing that line. It's a fairly well known business concept, but it's hard to implement.
     
  11. Aug 4, 2012 #91 of 101
    Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Winters,...
    Well, "riff-raff" may be a bit strong in some cases, but folks who can't pay or won't pay, good folks who've lost their jobs, idiots who call every other day, those whose dishes get shot out every month in gang wars, are all money losers to DIRECTV®, even though they are, for the most part, "paying customers".
     
  12. Aug 4, 2012 #92 of 101
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    It is more of a case of not signing up the riff raff.

    The quarter's gross loss of 915k subscribers is less than a year ago when they lost 928k subscribers. DirecTV has "got rid of" 824k to 963k customers each quarter for the past three years.

    The quarter's gross gain of 863k subscribers is the lowest since 2Q 2006 (six years ago). That is what kept DirecTV growing in "net subscribers" ... replacing the millions of customers who leave DirecTV each year with millions of new subscribers. Adding more than leave leads to a net increase.

    2nd Quarters are not typically the strongest for adding customers. DirecTV has not had a third quarter without 1 million gross adds in the last six years. And have not had a 1 million gross loss quarter - so 3Q should be a "rebound". But if they actually drop over a million or fail to replace more than they drop again we may be seeing a trend.
     
  13. Aug 4, 2012 #93 of 101
    zimm7778

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    That's not the mobile I'm talking about, plus I don't have $200-$300 to go out and buy a game system for the purpose of watching football only to turn around and spend another $200 on NFL ST. I am really surprised though the cable and FIOS companies haven't struck a deal with Sony and gone down the "order our service now and we'll give you a free ps3 and pay for NFL ST free for the first year" deal unless Directv allowing them to carry ST required they could not.
     
  14. Aug 4, 2012 #94 of 101
    Shades228

    Shades228 DaBears

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  15. Aug 5, 2012 #95 of 101
    Alan Gordon

    Alan Gordon Chancellor

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    I know of multiple businesses in which... and I want to state for the record that this is not an insult to these folks (as many of them are fine folks), but rather a statement of fact, that oftentimes, those who spend the least, or offer the least amount of profit, can be the same people who require more time/manpower, resources, etc.

    Imagine you're a DirecTV customer... you have one of the lower tier packages, a single STB (no DVR, no HD, no WHDVR), and you don't subscribe to any premium packages, sports packages (Sunday Ticket), order any PPVs, and yet you call in any consistently try to get discounts on your bills, etc... so you start getting tougher with credits, retention discounts, etc.


    ~Alan
     
  16. Aug 6, 2012 #96 of 101
    harsh

    harsh Beware the Attack Basset

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    The message is that not replacing those customers costs them a considerably less in the short term.
     
  17. Aug 6, 2012 #97 of 101
    BattleScott

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    There is far too much emphasis being placed on them cutting "dead-wood" or "riff-raff". The fact is that gross disconnects are LOWER than the same periods last year, this IS NOT indicative of an effort to agressively trim existing customers for ANY reason. What IS lower is gross additions, so they are either being more selective about who they add or customers are being more selective about who they choose... probably a little (a lot actually) of both.
     
  18. Aug 9, 2012 #98 of 101
    ChE74

    ChE74 Cool Member

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    IMO DTV doesn't have a business plan. Instead they rely on their sales staff and retention CSRs to make whatever deal they can.
    I was a long term sub. (since 1995) till mid this Jul. Never asked for any discounts, credits etc. Have a high credit score, exellent credit record , never late or missed a payment. Monthly bill higher than the average stated in DTVs quarterly report.
    I had 2 HR20's one of which was starting to act up.
    After seeing the DISH offers I called DTV to cancel and the CSR immediately offered some credits and free movie channels i.e. Showtime, TMC etc. When I mentioned that one of the HRs needed rebooting 1 or 2'ce a month I was offered a new HR. I said OK I'll stay and think about it. The HR they sent was not new but a refurb HR20 which I returned with out activating it. When I got my first bill I decided the credits weren't as much as DISH was offering and movie channels were worthless to us. But I thought I'll try to trade the movie channels for NFLST. The CSR I next talked to said I had agreed to take the movies and they couldn't give much of a discount on NFLST. Many people on these threads report of getting all kinds of deals on NFLST and free HD service. I've been on autopay through our phone company since 2008 and have been charged for HD service for the whole period. I decided it was time to say goodbye to DTV and called DISH back. When I called again to cancel the CSR tried to further negotiate but I said I'm done and just cancel us.
    Now more of the channels we watch are in HD (Americas 250 pkg.) and have the NFL red zone. I think on our main TV (new 60" )and 2nd (32") the PQ in HD is equal to anything we had with DTV. A few of the channels we watch in SD are definitely better. All of this for a smaller monthly cost and new state of the art eqp. We're very happy we made the change.

    Some close friends (also with DTV since 1998) have the same main TV we do and 2 smaller ones. After they saw our new set up they called DISH and within a few days they have the same package. When they cancelled they told the CSR they weren't interested in any credits , etc.and just wanted to cancel.
     
  19. Aug 9, 2012 #99 of 101
    inkahauts

    inkahauts Well-Known Member

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    Well you're wrong about their business plan they do have one it shows in the fact that they make a pretty darn good profit on a regular basis.

    As for your experience with getting another HR 20 that's actually on purpose since that's the only unit that has a built-in over the air.

    Glad you like the service you're getting from dish so far though that's excellent!
     
  20. Aug 9, 2012 #100 of 101
    Shades228

    Shades228 DaBears

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    My suggestion is in the future if something is offered and you know you won't have a value in it don't accept it. Companies have value on everything they offer and in taking something they have value attached that you don't. Good luck in the future.
     

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