DirecTV loses out from growing prevalence of “triple play” services

August 6th, 2009 by Trefis Team
+13.70%
Upside
16.09
Market
18.29
Trefis
T: AT&T logo
T
AT&T

DirecTV makes money through subscriptions to its satellite TV service in the US and Latin America.

DirecTV competes with cable operators such as Comcast and Time Warner Cable, and telcos such as AT&T and Verizon, which now offer fiber optic TV service.  The traditional boundary between cable and telecom companies is disappearing as companies integrate digital phone, broadband internet and TV services together into “triple play” bundles.  Cable operators first introduced the triple play bundle when they began offering digital phone service along with cable and internet service.  To compete with cable operators, telecom and satellite companies partnered to create synthetic bundles.  For example, AT&T would provide the phone and internet service while DirecTV provided the TV service.  Now, as telecom companies continue to roll-out their own fiber optic TV service, DirecTV will not be able to provide a bundled service to consumers.

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We estimate that US Satellite TV service constitutes 55% of the $19.68 Trefis price estimate for DirecTV.  Within DirecTV‘s content on our platform, you can see how DirecTV’s stock price would be impacted if the company were to lose Pay TV Market Share to cable and telecom operators due to increasing consumer preference for bundled services.