DirecTV Preps Broadband Boxes, Flirts With LTE

DirecTV Group Inc. (NYSE: DTV) is talking to movie studios about launching a new premium movie service that would let subs view movies soon after they are released in theaters, executives said Thursday.

"I expect you'll see some trials this year with some of the studios, probably around mid-year ... where perhaps we will try something that is four or six weeks from theatrical release at some higher price than we currently charge, and we will see how big that market is," DirecTV President Mike White told analysts Wednesday on the company's fourth-quarter earnings call.

DirecTV is also talking to studios about selling pay-per-view movies to subscribers on the same day and date they are released on DVD, which would help it compete with an increased number of day-and-date movies offered by Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and other major MSOs. DirecTV's cable rivals are also talking to major studios about charging a premium for VoD movies that are released soon after their theatrical release. (See The Prescience of John Sie .)

To advance its strategy, DirecTV is pushing its subscribers to wire their set-tops to broadband Internet connections, since the number of movie titles available to subscribers with a broadband connection is 10 times greater than what's available to customers who rely solely on satellite signals. About 850,000 DirecTV subscribers have broadband-connected set-tops, and the company hopes to connect up to 2 million set-tops this year, and extend that to 40 percent of its subscriber base by 2013, White said.

Looking ahead, DirecTV is also keeping a close eye on mobile broadband developments. DirecTV is running trials with Verizon Communications Inc. (NYSE: VZ) and other telcos on bundling Long Term Evolution (LTE)-based services, primarily in rural areas. "We look forward to working with all of our telco partners as LTE rolls out to see whether the concept would make sense," White said.

Also worth noting from DirecTV’s earnings call:

White said DirecTV recently completed deals with AT&T Inc. (NYSE: T) and Verizon to resell their broadband services, but that it hasn't yet determined what it will charge for bundles that combine satellite TV with Internet services offering speeds up to 25 Mbit/s. "I don’t know whether it ends up being $99 all in or $109, or somewhere in that vicinity," he added.

About 80 percent of new DirecTV subscribers order an advanced service such as a DVR, and "virtually all" advanced service customers spend an additional $7 monthly on DVR service, and one third order its Whole Home DVR product for an extra $3 monthly, White said.

DirecTV added 289,000 net new subscribers during the fourth quarter, more than double the net additions it generated during the same period a year earlier. (See DirecTV Crushes Q4.)

— Steve Donohue, Special to Light Reading Cable