DIRECTV takes television straight to the masses. The company operates the largest direct-to-home (DTH) digital TV service in the US, ahead of #2 DISH Network, and in direct competition with cable providers Comcast (#1 overall in the pay-TV market) and Time Warner. In addition to its roughly 20 million US customers, the company counts about another 12 million subscribers in Latin America under the DIRECTV and SKY brands. Services include HD, 3D, and video-on-demand (VOD) programming. Phone companies such as Verizon and AT&T bundle the company's video services with their own traditional voice, digital telephone, and Internet packages.
DIRECTV delivers its services through a fleet of a dozen orbiting satellites, one of them leased. It has two more under construction that are expected to launch in 2014 to provide extra capacity for replacement, backup, and HD functions. The company owns two digital broadcast centers (one in Colorado, the other in Los Angeles) that transmit the content received from its satellites. It also owns six uplink facilities to provide local HD channels. DIRECTV covers customer service from about 50 centers, six of which it owns and operates, located in Huntington, West Virginia; Huntsville, Alabaman; Tulsa, Oklahoma; Missoula, Montana; Boise, Idaho; and Denver.
Since 2009 it has also owned and operated three regional sports networks (in Denver, Pittsburgh, and Seattle) under the brand name ROOT SPORTS, which comprise its DIRECTV sports networks segment. It also has a 60% stake in Game Show Network.
One of DIRECTV's distinguishing points in terms of programming (relative to cable operators and satellite rival DISH) is its status as the only broadcaster authorized to sell NFL Sunday Ticket, which gives subscribers access to most of the Sunday professional US football games. DIRECTV exclusive rights also include related broadband, HD, interactive, and mobile services. That contract, renewed in 2011 through 2014, has helped it score subscribers and revenue while some competitors have struggled to maintain their customer bases. It counted 18.5 million subscribers in 2009, 19.2 million in 2010, and lit up screens for nearly 20 million customers by the end of 2011. Besides football, DIRECTV's core programming consists of about 2,000 digital video and audio channels including local, foreign language, HD, and pay-per-view options.
DIRECTV Latin America, however, continues to experience the most growth. While its US business maintains high single-digit growth in a largely mature and highly competitive arena, Latin America benefits from macroeconomic and demographic conditions, as well as pay TV penetration to turn in robust double-digit growth, up more than 40%, in fact, in 2011 on both revenues and operating income. There it has three business segments -- DIRECTV PanAmericana (more than 4 million subscribers, mostly in South America and the Caribbean); SKY Brasil (3.8 million subscribers), in which it owns a 93% stake; and SKY Mexico (about 4 million subscribers, some of which are in other Central American countries), of which it owns more than 40% (Grupo Televisa owns the rest). Brazil was the most notable contributor in the region in 2011's boon, but gross subscriber additions in Argentina provided a significant assist.
Latin America has grown to be about 20% of DIRECTV's overall revenues, and its subscriber base is up nearly 170% from the 4.5 million in 2009. Like in the US, football -- European-style football, that is -- has been a key player in this high-powered offense: DIRECTV was the only television provider to broadcast all of the FIFA World Cup soccer games in HD in 2010. DIRECTV was also the first pay-TV provider in the region to offer pre-paid service, a popular billing method in the region.
All this growth has been organic, as DIRECTV has not had any recent growth through acquisitions. Instead the company generally inks distribution deals to draw in customers needing bundled video, data, and telephone service. (Unlike cable providers, satellite providers don't typically have the built-in infrastructure to offer broadband service). The company already has agreements with most of the major telecom players to offer bundled service, the most popular choice for US consumers.
Besides the cornerstones of building its core business and improving productivity and costs, DIRECTV's strategy includes the pervasive trend of delivering media everywhere. It looks to enhance DVR capabilities and features for its customers, improve guide and user interface design as the service migrates to more devices, and enhance customers' ability to access programming and DVR content from various devices, particularly mobile.
Its other major strategic push is in creating new revenue streams.
Expanding its video-on-demand service, DIRECTV Cinema, is one key opportunity it sees. Advertising revenue is another. Historically, its national infrastructure has put it at a disadvantage to cable companies, which could target local advertisers, but it now has the capability to pursue advertiser dollars at the local level. The third major opportunity it sees is in commercial customers, as hotels upgrade to HD service, and the company pursues the under-penetrated private enterprises and smaller bars and restaurants.