Satellite Subs Will Reach 33.5 Mil by 2015

Kagan Research: estimates DBS’s current share of 29% is nearing steady state in terms of the multichannel market. As telcos come online with their video products the effect is expected to be similar to that of the last ten years, with the new platform driving deeper multichannel penetration and expanding the market. The primary effect, however, will be to further diminish cable’s share to 61% while increasing multichannel homes by nearly 20 mil. Kagan expects solid subscriber growth from DBS in the near term, waning a few years out as local-into-local and HD local penetration matures. At the end of the 10-year horizon, Kagan projects satellite will notch more than six mil. net new subs to total more than 33.5 mil. by 2015. Despite the lack of a competitive solution to the return path issue, DBS will continue to be a major player in the multichannel market through its established base and strategy of targeting underserved markets such as rural areas and international communities. In addition, new technologies are making features such as VOD and interactive, once the sole domain of cable, available via satellite and narrowing the competitive divide. And with the launch of new satellites, DBS operators will have more capacity to offer more high definition channels in the near term than their counterparts.

Other key findings and projections from include:

· In 2005, subscriber additions to DBS declined 29% from the previous year as the satcasters were hit with higher churn and increasing competition. The start of 2006 continued the trend with Q1 net adds down 50% year-over-year at DIRECTV and 31% at EchoStar. Full year results are expected to be 1.8 mil. net adds, 22% below 2005 totals. · The multichannel pie has expanded significantly over the past decade, growing 38% from 68 mil. at end-1995 to 93.8 mil. at end-2005 (before netting out cable/DBS duplicates). But DBS’s addition of nearly 25 mil. subs over the last ten years has shrunk cable’s share of the market by more than 20 points · Short term, DBS has lots of capacity coming online and an advantage in beaming national channels. Telcos have only 20-25 Mbps for video, data and phone, limiting them to just one HD stream, and cable is already nearing capacity at recently upgraded plants.. THE STATE OF DBS (8TH EDITION) Publ 20060928