Featured Forecast: Dish Network’s DVR penetration to reach 75% by 2016
Dish Network (NASDAQ:DISH) is the second biggest satellite pay TV provider in the US. It competes with other satellite and cable providers like DirecTV (NASDAQ:DTV), Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC).
We estimate that about 11% of the $27 Trefis price estimate for DISH stock can be attributed to its Digital Video Recorder (DVR) business. This value is created by incremental cash flows as a result of monthly DVR fee that the company charges to its customers for DVR services.
We estimate that about 50% of Dish Network’s satellite TV subscribers subscribed to its DVR service in 2009. This DVR penetration figure has increased by almost 12% since 2007 but still stands less than DirecTV’s 60% HD/DVR penetration in 2009.
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Going forward we expect this figure to continue to grow rapidly and reach about 75% by end of our forecast period. This rapid sustained growth can be attributed to the following factors.
1) The barriers to adoption of DVR services are low as Dish Network primarily bears upfront costs of installation
2) DVR adoption is an industry-wide trend driven by the convenience afforded to consumers by allowing them to watch their favorite TV shows at later time
3) We do not expect Dish Network to be under significant threat as a result of the legal battle against TiVo over DVR patent issues
You can modify our forecast above to see how DISH stock can be impacted if DVR penetration growth were not to increase as high as we have forecast.
For additional analysis and forecasts, here is our complete model for DISH.