Tuesday, August 05, 2008
How To Fail: Dish vs. DirecTV
byIt has always seemed to be a close race between Dish and DirecTV satellite networks, but lately it appears DirecTV is pulling ahead (see Business Week article). According to the BW article, here’s the reason:
“How did pay-TV’s most aggressive player arrive at this juncture? By failing to see the world changing around him. Ergen [Dish Network’s CEO], 55, focused on keeping costs low (he famously requires executives to share hotel rooms on business trips) and declined to bid for the pro football and Nascar programming that DirecTV offers exclusively to sports-loving satellite subscribers. He skimped on marketing even as DirecTV and the cable and phone companies hired actors and star athletes to hawk their services. He missed the high-definition revolution, concentrating instead on flashy technology, such as set-top boxes that can control TVs in two separate rooms. DirecTV, meanwhile, lured new subscribers with dozens more channels in crystal-clear high-definition.”
Dish Network’s actions seem like an object lesson in how to fail. They missed the mark on both technology and marketing.
I recently compared Dish and DirecTV for our home. I agree with Business Week’s assessment. With sales still hot on big screen LCD TVs, and the looming analog to digital changeover, DirecTVs focus on abundant HD channels made them a clear winner. And how could Dish Network skimp on marketing? When you are a newer type of service and you are in a two-horse race with the other satellite TV provider, marketing rises to paramount importance. It would be difficult for Ergen’s company to save its way to success in such an environment by slashing marketing spend.
Frankly, I think both Dish Network and DirecTV leave something to be desired from a user-experience standpoint. While their choices are substantial, both Dish and DirecTV make it difficult to find and choose what you want to watch. It looks like marketing – and the satellite networks’ desire to sell you more options – has won out over usability. Frankly, I would still prefer a cable service with many HD choices, but I live in a rural area and that is not an option.
At any rate, the way to win a close race in a rapidly changing industry is not by skimping on marketing or focusing on the wrong aspect of technology. Maybe Dish can pull it back together. The consumer is better off with two strong competitors out there. It will be interesting to see if the Sirius and XM satellite radio merger, and the diminished competition it will bring will affect the quality of that service offering. I think it will. Let’s hope this same type of scenario doesn’t happen with satellite TV.
