Bell ExpressVu reaches 1 million subscribers, continues to lead DTH market

A record September for subscriber additions and continued growth in urban areas has propelled Bell ExpressVu LP to the 1-million subscriber level, a month ahead of company forecasts. The direct-to-home (DTH) satellite TV distributor was targeting the end of the year to reach that milestone. But it attained it at the end of November even before the company’s traditionally strongest month – December. In an interview with CCR, Bell ExpressVu president and COO David McLennan notes that 70 per cent of the 83,000 new subscribers gained in the third quarter ended Sept. 30 came from areas served by cable. He adds that 24 per cent of those new subscribers were in Toronto, Montreal, or Vancouver – a disturbing figure for the country’s major incumbent cable operators. "I want to illustrate that we are not only doing well in the smaller cities, we’re doing quite well in the major urban markets as well," McLennan says. "What we are seeing is an ever-increasing trend in acquiring subscribers in urban markets. I think that’s really proven to us that (satellite TV) is not just a rural phenomenon – that our product is very competitive with a cable company’s in urban markets." Bell ExpressVu’s fiscal 2001 third-quarter was its strongest third quarter to date in terms of subscriber growth. Net subscriber activations were 22 percent higher than in Q3 2000, and 63 per cent higher than the previous quarter of this year (Q2), when it added 51,000 subscribers. McLennan attributes the strong third quarter, particularly the month of September, to a greater awareness of digital, sparked in part by the launch of a slew of new digital channels. "The fact is that there were a lot of industry stakeholders talking about digital television, and advertising and promoting the digital television category (in September)," he says. "…And I think that just generally raised the awareness of digital television and drove some fairly material demand." ExpressVu outpacing Star Choice Not only has Bell ExpressVu been gaining in what has traditionally been cable territory, it is also outpacing its satellite TV rival Star Choice Communications Inc. At September 2001, Bell ExpressVu had 59 per cent of the DTH market share, while Star Choice had the remaining 41 per cent. Bell ExpressVu’s strong September apparently will not be matched by Star Choice, which is expected to announce lower-than-expected subscriber growth of just 40,000 for its fiscal 2002 first quarter ended Nov. 30. In a recent statement, Star Choice parent Shaw Communications Inc. blamed the events of Sept. 11 for the expected poor numbers. Shaw added that the terrorist attacks had more of an effect on its satellite TV offering than other aspects of the company because it is sold primarily through retail, whereas the other products are basically direct sales.Star Choice had 628,806 subscribers at the end of its 2001 fiscal year ending Aug. 31, and is targeting 900,000 subscribers at the end of fiscal 2002. The DTH operator has initiated a number of new measures in recent weeks aimed at wooing more customers, including a new purchase and leasing option (Simple Satellite and No Worries Simple Satellite), opening new call centres, launching a direct-to-home sales team, certifying professional installers, and enhancing tools provided to retailers (CCR Update, Oct. 17/01). Still, McLennan makes note of a "long stream of advantages that have kicked in," for his company, including the launch of its high-powered DBS satellite that gave Bell ExpressVu a capacity advantage, and advanced applications in its set-top boxes. Having the Bell brand in his corner has also helped. Although Bell ExpressVu does not publicly break down subscriber numbers by region, McLennan acknowledges that the DTH operator is a little bit Ontario and Quebec centric. He notes that more than 20 per cent of Bell ExpressVu’s customers are in Quebec. "We are a bit Ontario and Quebec centric, but not dramatically so," he says. He attributes that to getting a "big lift from the Bell brand in those markets." Analysts have long wondered if the Canadian market is big enough to support two DTH players over the long term. In the U.S., which has a TV market 10 times that of Canada, EchoStar Communications Corp.’s proposed takeover of DirecTV Inc. would reduce the number of national DTH providers to one, if its bid is successful. Even Japan is down to one DTH provider after having three at one time. McLennan believes there’s room for two DTH operators in the Canadian market. He agrees with predictions that say that satellite providers can grow to 25 per cent market share by 2004-2005, which translates into about 3 million customers. "We’ve certainly structured our business case assuming that there will be two providers in the market. Based on the kind of scale of the market that I spoke to in terms of the industry being about 3 million subscribers over that time period, our business model works just fine. Our assumption is that there (will continue to be) two providers here in Canada. But that’s certainly an interesting question, given the events with EchoStar and DirecTV." McLennan concludes: "Achieving a million (subscribers) is really exciting … and we’ve proven that in the face of a lot of naysayers, this product is competitive not only in a rural environment, but also in an urban environment…Hitting a million subscribers is by no means the end of the game." For in-depth analysis on the DTH and digital TV market in Canada, order Decima Publishing’s quarterly market overview report, The Digital Domain: Tracking the Growth and Development of the Digital TV Distribution Market. The second report will be released shortly. For details , contact Mario Mota at (613) 230-1984 or mmota@decima.ca.

Bell ExpressVu reaches 1 million subscribers, continues to lead DTH market

Broadcast | December 6, 2001

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