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Dish TV threatens cable
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January 10, 1997: 2:57 p.m. ET
Seems expensive at $1,000 a pop, but who argues with 4x growth since '92
From Correspondent Steve Young
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LAS VEGAS (CNNfn) - You may feel cable TV is a rip-off, but $20 to $40 a month sure seems a lot more reasonable than laying out $1,000 for a satellite dish.
But the dish business has exploded in the past two years - so much so that direct broadcast satellite, as it is known, has become one of the fastest growing consumer electronic products ever created.
Hardware sales for the service have rocketed to $1.6 billion from about $380 million in 1992. Indeed, dish TV has become so popular that sales growth even has eclipsed that of the videocassette recorder in the 1980s. (941K QuickTime Movie)
The growth has been so ferocious, in fact, that it's starting to make the big cable companies sweat.
What's the big deal? DBS offers television images and sound more clearly than just about any cable system, and monthly service charges are often less expensive than standard cable set-ups.
"It's been unbelievable," said Denny Wilkinson, senior vice president for PrimeStar. "We have over 4.5 million customers in the industry, and as a whole, DirectTV is the leader. We are number two, with 40 percent of the market. We have nearly 1.7 million customers in just shy of two years." (373K WAV) (373K AIF)
The little dishes first appeared around the countryside, in small, rural areas; however, they are quickly becoming a fixture in metropolitan areas as well.
In a yet-to-be-released industry survey of 1,000 DBS customers obtained by CNNfn, more than two-thirds said they discontinued regular cable service after being exposed to the direct satellite link.
Those who decided to stick with cable indicated that their primary reason involved access to local news. Because the satellite link blankets the entire nation, it simply doesn't have the capacity to carry the thousands of local affiliates necessary to provide local television coverage.
As a result of DBS successes, some of the larger cable companies - like Time Warner Inc. and Tele-Communications Inc. - are hedging their bets by purchasing an interest in the direct broadcast satellite business.
"I think cable is very concerned about what DBS is doing to their potential subscriber base," said Michael O'Hara of Thomson Consumer Electronics. (118K WAV) (118K AIF).
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