Directv Going To Lease Only On 3/1/06

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Do I want to pay $1000 for an HDDVR, No but then again pricing hasn't been announced from what I have heard. That Said would I pay $500 (which is at the upper end of some of the unit cost mentioned) for one, that I own and can upgrade and tinker with if I see fit probably, especially if the alternative is renting one that I can't mess with because it isn't mine. One of the reasons I left cable in the first place was rental fees. I currently do not have HD, the reason is the price point for the equipment (TV, Tuner etc) is just getting to the point where I think it is doable and is getting better. This this year or early next is probably the year I want to make the switch. Now I may get stuck with rental fees on top of what I still consider an unknown quantity (the NDS based HDDVR) with an OS that from what I have read is still a little buggy (will probably change by the time I actually upgrade but with current info...).

So my apparent options when I go to upgrade are:

1. Stay with D* and use rented equipment with the above limits with a rental fee and HD package fee on top of my current. or

2. Get a series 3 when it comes out and pay tivo a higher rate for monthly DVR and get a box that is a known commodity as far as the OS look and feel and the features set I like.

My feeling is that since pricewise D* and cable is comparable for what I want. the only thing that D* offers that I cable doesn't is NFL (I don't get it anyway so its a push anyway). So I can get HD with the programing I want, use a DVR with a UI that I know I like (Unless series 3 changes it drastically which I doubt), own the equipment, and pay a similar price. Cable is starting to look like a reasonable choice, so when I do upgrade to HD I will definitely evaluate ALL of my options.

 

But don't forget that $X represents a price that has been subsidized by DirecTV. The "real" cost of those receivers is probably something more like $X*2.

Essentially, they are now saying we will subsidize the cost of the receiver if you return it when you cancel or you can buy it at the full unsubsidized price (see top of page 3 of the Executive Summary posted by Lee Espinosa) and keep it after you cancel. Either way, your monthly bill will remaing the same because you will pay a $4.99 "mirroring fee" for additional purchased boxes and you will pay a $4.99 "lease fee" for additional "leased" boxes.

The problem with buying at the unsubsidized price is that it is unlikely that you will be able to sell used recveivers for a price that is greater than the amount that was subsidized by DirecTV in the first place.

 

DTV is going downhill.

 

everything except HD DVR's are basically free now a days. So It sounds to me rather then having to plunk down cash and get a rebate to get "free equipment" then pay a $5 mirror fee. Now you will get everythign for free and pay a $5 lease fee. The only differnce is now they can demand the equipment back when you leave. If they make the HD DVR's free but charge $10 a month they basically will equal cable.

They ahve said in their recent conference calls that they want the hardware back to reuse- it's a huge cost to them just handing out boxes fro free all over that they no longer own when people leave.

 

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Given the quality of the new receivers/DVRs, giving them away is probably the best way to get anybody to use them.

 

they have been asked pointed questins repeatedly on the last few confernce calls about the lack of broadband and triple (and now quadruple) play. They have said nothign that sounded anything like they wer moving along on any of it. They say they see no rush to do it and might not ever. Last quarter (or the quarter before) the analysts even asked them if SkyTV in england just bought a broadband provider if they would and they said it's 2 different situations so what made sens in england might not make sense here. THey have been asked directly about wimax and said they only currently look at is as a way for them to get backhaul data (instead of PPV phone calls form the boxes) or maybe as a stretch as a way to do VOD but they didnt see it currently as anythign for them to over as an ISP- just internal use.

I wouldn't expect them to do anythign with broadband in the next couple years myslef.

 

In my experience whenever pricing structure changes it means you will pay more (unless grandfathered). The first change in equipment or programing and you will be on the new system. I'm not saying its bad because you probably will be getting something added, the question is, is whats added worth the extra cost.

 

Likely the next SD box they make will be able to decode MPEG4 and will be able to downconvert.

Come 2009 there will be no NTSC (analog SD) but only ATSC (DIgital can be HD or Not)- so at that point they will be retransmitting ATSC to everyone for sure. On ATSC, most all of the Big 4 (every fox is now I believe) and PBS will be HD for at least part of the day with plenty of UPN and WB in the larger DMA's. So by defualt I think they will be carrying any HD that exists with the 2 new sats in 2007. The only question is will they switch the channels that stay SD but go ATSC in 2009 to MPEG4 and/or to Ka.

 

what doug said...

 

with the exception of HD DVR's all their stuff is bacially $0 upfront now anyhow if you can get in on one of their deals of pester retention..

Maybe they plan to go free for the HD DVR's too with a higher lease fee?

Likely this is the market for valueelectronics and solid signal. Instead of the numbers int eh D* memo, they will offer equipment for free or much lower cost.

 

Michael,
Their upfront pricing for the lease model was announced with the rest of the announcement. See http://www.tivocommunity.com/tivo-vb/showthread.php?p=3675097&&#post3675097

It's a $5 lease fee for any equipment (after the first receiver) with variable upfront costs. In effect, it's exactly the same cost as today, but with the exception that after 10 years of paying $5, you own $0 worth of equipment.

 

This is nothing like leasing a car/computer/boat. After the lease period for a car, you generally either return the item to the lesser, and lease a new one, or buy out the item for the pre-negotiated residual value. This can be done through cash, financing, or even re-leasing the same equipment to some new residual value. Under D*'s lease model, there is not buyout option, and they'll continue collecting $5/mo from you until they deem the item outdated. So if you lease their D20 with is MPEG4 compatible, and will compatible with D* for 15 years, you could pay $5/mo for 15 years ($900!) and still have nothing of value at the end.

This is really a RENTAL model. And it's why I refused to pay my cable co for their receiver.

 

Recouping that subsidy is built in with the cancellation penalty. People will still be subject to the cancellation penalty even if buying their equipment.

 

I don't know about that. Without the subsidized boxes, they no longer have any justification for an early cancellation penalty. Have you seen anything about this in writing? The Executive Summary doesn't address the issue.

 

Nothing has been said stating the receivers subject to lease are subsidized or that the receivers for sale aren't subsidized; the only thing said is that dealers won't receive a commission on sold receivers -- that they must mark up the price appropriately if they want to earn a profit selling receivers.

 

Think of this as a marketing/advertising ploy. How many frozen faces have you seen when someone is told that in order to go with D* they have to purchase the equipment? "Well I just have to lease it from the cable company". D* never hears from these people. Now D* leases the equipment. "Hello, D*, I'd like to sign up". Now D* has them on the phone >>their goal<<. Now, it's easier to charge upfront costs for "extra" equipment since they now have the customers' attention. Makes sense to me.

However, put me down as a very unhappy customer since I no longer own the equipment. This after paying the same(?) price as previously.

 

That certainly read to me as if they are stopping subsidies on sold hardware once the lease program takes over.

 

Thing is, it's the same cash up front whether it's a lease or purchase so I don't see how an unsuspecting customer would fall for it.

 

The dealer won't be.

 

Some 15 million people figured it out.