2013/09/10 While Satellite Subscribers Decline, STB Vendors Continue to See Growth
DirecTV and Dish reported subscriber numbers for the second quarter of 2013 this week. Though both lost subscribers, rather than adding, thereby reducing their total subscriber numbers, it is interesting to note that their gross subscriber additions also declined.
Gross subscriber additions are more important than net subscriber numbers in determining the trends in the set top box market. While some of the added subscribers receive remanufactured boxes, many are signing up for the latest and greatest boxes, HD DVRs and home media servers.
The table below show gross subscriber additions over the most recent quarter compared to the year ago quarter, and the first half of 2013 compared to the first half of 2012. Many providers do not report this number, but here is a sample of satellite pay-TV providers.
Table 1. Gross Subscriber Additions for Select Satellite Providers
| 2Q 2013 | 2Q 2012 | 1H 2013 | 1H 2012 | |
| DirecTV US | 839,000 | 863,000 | 1,732,000 | 1,804,000 |
| Dish | 624,000 | 665,000 | 1,278,000 | 1,338,000 |
| DirecTV LA | 1,189,000 | 1,119,000 | 2,370,000 | 2,153,000 |
| Sky Deutschland | 131,000 | 124,000 | 269,000 | 279,000 |
Source: Company Financials
Even though gross subscribers are declining for some providers, capital expenditures on subscriber equipment have climbed over 2012. Subscribers are continually taking more advanced HD and DVR boxes. The increase in cap ex is also due to shipment of higher priced media server boxes like the Genie and Hopper. This has led to increased revenues at several of the large satellite set-top box suppliers.
The table below shows hardware expenditures. For DirecTV and Dish this is subscriber leased equipment only, while for Sky Mexico it is the total reported. The Sky Deutschland numbers are reported hardware costs. All of them show increases over the prior year period.
Table 2. Hardware Expenditure Comparison for Select Satellite Providers
|
2Q 2013 |
2Q 2012 |
1H 2013 |
1H 2012 |
|
| DirecTV US | $270,000,000 | $163,000,000 | $555,000,000 | $408,000,000 |
| Dish | $154,000,000 | $132,000,000 | $301,000,000 | $239,000,000 |
| DirecTV LA | $369,000,000 | $286,000,000 | $680,000,000 | $641,000,000 |
| Sky Deutschland | €19,900,000 | €13,800,000 | €40,900,000 | €28,900,000 |
| Sky Mexico | $77,100,000 | $56,500,000 | $149,100,000 | $108,500,000 |
Source: Company Financials
The increase in hardware spending shows up at the set-top box suppliers. For the first six months of 2013, EchoStar Technologies’ equipment revenue from Dish Network is $606 million compared to $491 million in the same period of 2012. Revenue from other customers like Bell TV in Canada declined from $226 million to $89 million.
For Pace, STB and media server revenue was up almost 52% to $1.07 billion over the prior year. Media servers accounted for $300 million of Pace’s year over year revenue growth. Pace has shipped over 2 million Genie boxes to DirecTV since June 2012. STB revenue in North America was over $600 million compared to less than $300 million in the first half of 2012. The increase in Latin America was much less going from $150 million to $190 million.
Technicolor’s Connected Home revenues were €630 million in the first half of 2013 compared to €572 million in 2012, though this includes more products than just set top boxes. Technicolor’s Connected Home revenue in North America was down as some satellite STB models were phased out, though they were up in Latin America with HD boxes representing a higher percentage of the satellite mix. Volume STB shipments were 1.9 million in the first half in North America compared to 4 million in 2012. In Latin America, shipments went from 6.1 to 8.2 million.
Humax total revenues were up 3% in the first half of 2013 compared to 2012, though US revenues were down due to the first quarter shift from HD DVR to home media server products. In the second quarter of 2013, 31% of its revenue came from home media servers.
Source: MRG Analysis
