Satellite companies Dish Network (
) and DirecTV (
) have done well in the past few years and gained subscribers
as opposed to cable companies that have suffered consistent
subscriber losses. Dish's subscriber base has increased at an
average annual rate of 0.4% over the past five years. The company's
pay-TV market share declined slightly from 13.6% in 2007 to 13.4%
in 2012. Overall the pay-TV industry is witnessing a decline due to
the rise of alternative video platforms such as Netflix (
) and Amazon (
). Going forward, we expect Dish's pay-TV market share to more or
less stabilize in the long term, helped by the Blockbuster
streaming service and the company's increased focus on acquiring
high quality subscribers.
See our complete analysis for Dish
U.S. Pay-TV Market Remains Competitive
Even though Dish Network is employing multiple strategies to
improve subscriber growth, there is fierce competition from
DirecTV, cable operators such as Comcast (
) and Time Warner Cable (TWC), as well as telcos such as AT&T
(T) and Verizon (VZ). Unlike Dish Network, DirecTV has done
extremely well and has grown its pay-TV market share from 17.4% in
2008 to 19.2% in 2012, as per our estimates. The company was able
to do so because of its strong brand and customer service, unique
programing such as NFL Sunday Ticket and maintenance of good
customer credit standards.
As far as cable companies are concerned, they are still losing
subscribers. SNL Kagan in a recent report stated that the U.S.
cable TV industry lost 1.8 million subscribers over the last 12
months. However, Comcast has improved a lot on this front as it has
been able to reduce the subscriber losses. The company has been
investing in improving its customer service and promoting its
Xfinity brand. It also introduced a subscription streaming service,
Xfinity Streampix, to create an incentive for its subscribers to
stay. Telcos, with their fiber optic services including FiOs and
U-Verse bundled with voice and broadband, are still gaining
subscribers. The overall market is saturated and quite competitive.
We believe that it will be extremely difficult for Dish Network to
gain share. However, with slow and steady subscriber growth, it
might be able to maintain its market share.
Dish Is Affected By Growth In Alternative Video
Dish's subscriber base grew from 13.8 million in 2007 to 14.1
million in 2012. However, it dropped to 14 million this year,
largely attributable to the overall decline in the industry.
According to a report by Moffett, video subscriptions in the U.S.
dropped by about 316,000 compared with growth of 330,000 the year
before. On the other hand, alternative video platforms such as
Netflix have seen strong subscriber growth. Netflix gained 1.3
million subscribers in the U.S. in the third quarter alone (Read
Netflix Demonstrates Strong Performance; Stock
Remains Richly Valued
Many customers now prefer to watch content online using multiple
devices on the go. Dish also offers content streaming through its
, which gives access to thousands of movies, TV shows and kids'
titles streamed on a TV, computer or iPad. Dish currently charges
$10 for this service and offers 20 additional channels in this
add-on pack. We believe that the expansion of
with more content clubbed with Dish's popular hopper DVR can help
in the long run.
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