Would they want people to skip their commercials???

I feel that a firm's ability to react quickly to changes in the marketplace is an important strategy for all businesses.  The speed of change directly relates to how well a company can keep up with their competitors.   In the broadcasting sector, this is especially crucial because there are many options available for consumers to choose which company they want to use for cable television.  In a market where innovations in technology are always present, Directv must be able to foresee which technology will be used by their competitors.  In one of my earlier posts I touched on the fact that Directv has acquired technology that will allow its customers to skip television commercials.  Although it appears that this type of ad-skipping service would draw vast amounts of customers, Directv has held off using this technology until sees what kind of litigation Dish will deal with regarding certain networks.  Even though Directv possesses this technology, I feel that this strategic decision of "wait and see" was the right one to make for Directv.  

Strategic positioning or diseconomies of scale???

Directv has always strived to be an innovator in digital television broadcasting and has been able to so so by differentiating the services that it offers.  Directv has been able to compete with the likes of Dish and local cable providers due to its superb HD quality and its contracts that it holds with sports organizations such as the NFL.  Now Directv is starting to develop the position strategy of focused differentation in the market place.  Directv will accomplish this by offering an Ultra HD service to its customers.  Although the implementation of this new technology may be several years into the future, Ultra HD will keep Directv a step ahead of rivals like Dish and local providers like Time Warner and Comcast.  By keeping up with the latest technological advances in digital broadcasting, Directv will be able to maintain a large customer base and provide avenues for growth in the future. 

One area that concerns me with Directv trying to gain market share in areas of the world such as Latin America and South America is that they will experience diseconomies of scale.  As they become a major player in these markets I believe their total costs will definately increase as they provide more digital services to these less industrialized countries.  The fact of the matter is that customers in these areas will not be able to pay the same rates as people in the US.  I believe as they expand in these types of markets, higher costs will be placed on their customers that can afford it, such as the US customers, in order to make up for the lost profits.

Good luck new incumbents...

One of the most crucial factors concerning Directv, in relation to Michael Porter's five forces model, is the rivalry that exists in the industry.  Dish and Directv are by far the largest digital cable providers who are constantly competing to gain a larger market share.  Although there are new companies emerging on the scene, such as U-Verse, none are considered rivals of Directv just yet.  The fact that Directv and Dish have such a large market share of digital cable broadcasting makes the barriers to entry extremely difficult for new companies to emerge.  In light of this, Directv has a metaphorical shield that protects their share in the marketplace.  The threat of entry keeps profitability high for Directv and Dish while making their rivalry more intense.  Until digital broadcasting companies can develop new technologies, strategies, or a better business model it seems clear that the likes of Directv and Dish will continue to dominate the market.

Not asking for help can be a problem

In every industry, growth and profitability are reliant on how a firm manages and allocates its resources.  Top and middle level managers are often the people responsible for ensuring that their particular firm remains competitive and profitable for its shareholders.  Sometimes the best resources a firm can attain comes from outside help.  Of course everyone has heard of outsourcing and how the use of it can make a company more profitable by having goods or services produced outside of the firm.  

Another way a firm can use outside sources is by acquiring new business models from companies who operate in the same types of industries.  This is exactly what Directv did in order to be able to meet customer    demands as well as sustain growth for the future.  Directv partnered with CSC in order to develop this new business model.  CSC is a global consulting group that helps companies develop technology-enabled solutions to help companies meet their specific goals and needs.  With the help of CSC, Directv was able to introduce a new business model regarding their supply chain that would lower costs and allow Directv to install and fulfill customer orders in a shorter response time.  According to Michael Bek, a senior manager in CSC's supply chain division,

                      "Directv's order fulfillment volume increased 300 percent with only a single-digit personnel increase. Recovery and repair costs dropped by more than 10 percent, and processing time for customer credits decreased by 85 percent. Directv also began redeploying refurbished hardware back into distribution channels, saving millions of dollars in deferred purchases of new hardware."

Into the future...

Directv strives to be an innovator in the technology that provides its customers with the best possible television experience.  In the past, they have done this by providing users with the highest quality satellites available in the market and supplying the clearest premium and local HD channels.  Since we are living in a growing mobile society Directv plans to improve their mobile telephone application by allowing users to use voice recognition software to change channels or search for particular programming.  This is one way Directv is trying to stay ahead of its major competition in the future.

In 2007, Directv acquired technology that would allow its users to skip television commercials, however they have not decided to implement it to date.  Directv's CEO, Michael White, is showing great leadership for the company by not implementing the technology until lawsuits play out stemming from Dish using the technology as a negotiation tactic in order to gain cheaper prices from programmers.  Mr. White plans to keep Directv out of the legal ramifications associated with the technology while also letting Dish test the consumer market.  Directv and Mr. White are basically letting the competition do all of its dirty work for them while they sit idly by ready to pounce.  
 

Directv is an American digital television service provider that broadcasts to almost 20 million customers in the United States and Latin America.  Its major competitors are Dish and local cable television providers.  Directv has always tried to differentiate itself from its competition by offering the best digital programming available in the marketplace.  One way that Directv stands out from its competition is by offering the most HD channels and by offering premier sports packages such as NFL Sunday Ticket.  From a corporate standpoint, Directv has been involved with mergers and acquisitions since its inception.  Most notably, in 2002, Directv's merger with rival Dish was shot down by the FCC and Department of Justice because the government thought that this merger would be unfair for market competition.  Directv's business strategy has always been formulated around retaining customers while gaining new ones through promotions on programming packages.  Last year NFL Sunday Ticket was offered free for new customers while returning customers had to pay $299 in order to have Sunday Ticket for the second year.  This year, Directv is trying to regain some of the former Sunday Ticket patrons by offering a "lite" or "diet" version of the special sports package.  The "lite" version will be offered to customers for $199 but will not include the Redzone channel or certain mobile features.  By the end of September of this year we will be able to see if this strategy has worked or not...