Credit: Shutterstock photoDirecTV ( DTV ) competes with satellite pay-TV providers like Dish Network ( DISH ), cable companies like Comcast ( CMCSA ) and Time Warner Cable ( TWC ), and telecom operators like AT&T ( T ) and Verizon (VZ). Our price estimate for DirecTV stands at $42.51 , in line with market price.
DirecTV recently announced a partnership with Samsung to provide users the flexibility to watch live and stored (DVR) TV content on any television in the house without having to use separate set-top boxes for each. The technology will be compatible with smart TVs manufactured by Samsung. The move positions DirecTV as a leader in the pay-TV industry in regards to multi-room viewing technology.
Efforts to perfect the technology for viewing content in multiple rooms have been going on for quite awhile, with prior attempts made by TiVo and FiOS HD DVR. But the latest developments are a result of efforts through a formal alliance between DirecTV, Samsung, Cisco (CSCO), Broadcom and Verizon.
How significant is this for DirecTV and consumers? Below we explore the possible long-term impact of this product integration on DirecTV's value.
Customer Use
With RUV technology, DirecTV customers will be able to receive content on every TV in their house, with similar functionality and experience on each without the need for a separate set-top box. The RVU server enables features like access to HD programming, record and playback of HD programming and other interactive applications.
What is the Upside to DirecTV?
Is multi-room viewing important to U.S. consumers? According to data from Nielsen, more than 50% of U.S. households have 3 or more TVs, while only 18% have 1 TV. The overall average during 2010 was estimated to be 2.93 TV sets per household. The chart below (from Nielson's Blog) depicts historic trends in TV sets per household.
TV sets per household data fron The Nielsen Company
As illustrated in Nielson's chart, a growing mix of American households are adding a third TV, forcing service providers to address the concept of multi-room viewing. As DirecTV's customers tend to be more affluent, its users are more likely to fall within the 3+ TV category. Therefore we believe that DirecTV is taking a step in the right direction to enhance its users' experience and position itself as a leader in this segment.
The technology is still only compatible with Samsung TVs, although we anticipate that other manufacturers will move towards RVU technology over time. Thus, the real benefits from attracting new subscribers may materialize over a longer time period.
Drag the trend line in the chart below to see how market share growth in the years ahead could affect DirecTV's stock value. We currently project slight gains in this metric, although the company's new initiative could generate upside to our base forecasts.
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You can see the complete $42.51 Trefis price estimate for DirecTV's stock here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
