NEWTOWN, Conn. -- Along with DISH Network, DirecTV dominates the U.S. direct broadcast satellite (DBS) services market. DirecTV is also focusing on growing its presence in Latin America, as is evident by the recent launch of SKY MEXICO 1 and SKY Brasil 1. Despite the strong position of DirecTV, the overall market for satellite TV is declining and more consumers shift to viewing video content via the Internet.
As a result, DirecTV is beginning to change its strategy under the leadership of new owner AT&T, Inc, which is shifting the focus of DirecTV away from satellite services and toward a so-called "over-the-top" model, in which live television is streamed over the Internet. The company's new DirecTV Now service will offer traditional cable television channels that will be sent to customers over the Internet. Using the Internet rather than satellites significantly lowers the cost for customers and reduces the need for expensive satellites.
The focus on Internet services will reduce the need for new satellites at DirecTV. However, it will not eliminate the need entirely. Satellites will continue to serve legacy customers who have already signed up for satellite services and do not want to switch. Satellites will also continue to be effective in reaching rural customers who do not have access to the high-speed broadband connections required to stream live television. Finally, DirecTV Now will focus on lower-cost packages to compete with on-line competitors like Sling TV, which might mean that customers who want higher-end packages will still turn to satellite-based solutions.
For those reasons, DirecTV will continue to take delivery of new satellites throughout the forecast period.
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