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Take-Aways: Competitive Action

Take-Aways: Competitive Action. Just what is the competition up to? Panelists: Matt Stump, One Touch Intelligence Scott Boomer, Eagle Communications Kyle Alcorn, New Wave Communications. Initial Research. Communications Landscape. Shifting sands across cable, DBS, telco and broadband.

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Take-Aways: Competitive Action

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  1. Take-Aways:Competitive Action • Just what is the competition up to? Panelists: • Matt Stump, One Touch Intelligence • Scott Boomer, Eagle Communications • Kyle Alcorn, New Wave Communications

  2. Initial Research

  3. Communications Landscape Shifting sands across cable, DBS, telco and broadband

  4. DBS Growth Strategies • HD (DirecTV 100-150 channels) • DVR (EchoStar’s DVR marketing) • Exclusive sports packages (MLB Extra Innings, Sunday Ticket) • Pricing strategies (DirecTV as premium provider; DISH as low-cost provider)

  5. DBS Challenges • Relies on telco partners for broadband, voice and wireless bundles • Telco partners in bundle are increasingly DBS’s video competitor • VOD lacks cable’s breadth and depth • Lacks local content, community roots

  6. RBOC Growth Strategies • Wireline video expansion (FiOS, U-verse) • Broadband speeds (FiOS) • Wireless broadband expansion (data revenues, video) • Quad play bundle with wireless • Cross-platform integration

  7. RBOC Telco Challenges • Stemming access line losses • Third to market in video • Technical challenges with U-verse (scaling, speeds, capacity, service reliability, customer service) • Increasing financial questions regarding cost to support video services • VoIP’s better economics • DSL’s technical limitations • New SMB competitors

  8. Video/Data Net Adds • Video 2006 2005 • Cable 207,756 (136,807) • DBS 1,885,000 2,328,000 • Telcos 192,000 0 • Total 2,284,756 2,191,193 • Broadband 2006 2005 • Cable 3,754,959 3,330,493 • Telcos 5,004,000 5,186,000 • Total 8,758,959 8,516,493 * Does not include Cox or Brighthouse

  9. DTV HD Channel Lineup • Today (12): Discovery, ESPN, ESPN2, HDNet, HDNet Movies, HGTV, NGC, TNT, Universal, HBO, Showtime, NFL • Sept. (25): A&E, Food, Versus/Golf, TMC, Animal Planet, Discovery, History, TLC, Science, Starz (5), Weather, HBO (7), Cinemax (3). • 2008 (18): ABC Family, Big Ten, Bravo, Cartoon, Chiller, CNBC, CNN, ESPN News, FX, Sci Fi, Showtime West, Speed, TBS, Tennis, Toon Disney, USA, Discovery (2). • RSNs (21): full time (5), part-time (16) • MLB, NFL, NHL, NBA sports packages: 10-15

  10. HD Stats • 33M current HDTV homes • 14.5M homes with HD STBs • (66% cable, 27% DBS) • 40M HDTV homes by year’s end • 16M HDTVs to be sold in 2007 • Source: CEA

  11. AT&T U-verse Bundle • U100: $59/month—100 channels/ 1.5Mbps/1M • U200: $74/month—195 channels/1.5Mbps/1M • U300: $94/month—240 channels/1.5Mbps/1M • U400: $119/month—300 channels/3Mbps/1M • Elite 6Mbps/1 costs $10 more • HD channels: A&E, Cinemax (2), Discovery, ESPN, ESPN2, Food, HBO (2), HDNet, HDNet Movies, HGTV, MHD, NGC, NFL, Showtime (2), Starz (2), TMC, TNT, Universal, Wealth

  12. U-verse Limitations (current) • Can only watch one HD stream at a time • Limited VOD menu (compared to cable) • HSD tops out at 6 Mbps • Day-long installs • Some users report (HD) pixelation, DVR scheduling issues • Central office (2,500 foot) distances

  13. U-verse TV Subscribers Q3 06 Q4 06 Q1 07 Q2 07 • U-verse TV adds 3,000 0 10,000 38,000 • U-verse TV total subs 3,000 3,000 13,000 51,000 • U-verse TV homes marketed 30,000 100,000 750,000 1.3M* • U-verse TV penetration 10% 3% 2% 4%

  14. FiOS TV and Internet • 200 channels: $42.99/mo. • HDTV: $9.99/mo. • HD/DVR: $12.99/mo. • 5M/2M: $39.99/mo. • 15M/2M: $49.99/mo. • 30M/5M: $179.99/mo.

  15. FiOS TV Stats

  16. Competitive thoughts • Think “quality” HD---Focus on most popular HD channels. Augment “long tail” HD channels with VOD. • Think about SDV: What’s the difference between a 500-home node and a 500 subscriber system? • Steal a page from DBS---Offer VOD through the Internet and create PC-to-TV link for broadband subscribers. • Think P2P—Could you use your broadband subscribers PCs as servers for a local area server network? • Think Skype---Could you offer phone service through IP? • Think local—Record, show and store every major HS sports, community fair, parade, dance recital, theater event, etc. Make it available on broadband and VOD.

  17. Thank you • Matt Stump • Vice President • One Touch Intelligence • www.onetrak.com

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