This is How Apple Will Eventually Defeat DIRECTV

| Hidden Dimensions

I have a story to tell.

When I first bought my DIRECTV HR22 HD DVR at Best Buy a few years ago, it was pretty nice. Sleek and black, it could hold 100 hours of HD programs. But over time, DIRECTV has added so may features with automatic software updates that the 2009-era CPU just couldn’t keep up. My wife was particularly annoyed because she’d press a button and nothing would happen while it struggled to handle the command. Then she’d press the button again, and after a few seconds the DVR would both respond and unrespond to the second press. Start over.

I read reports of the fairly new HR24 at DBSTalk, saw one in action at a friend’s house, and I was pleased with the response time. So I decided it was time to get rid of the old HR20 in the bedroom, move the HR22 up there and get a new HR24 for the living room. And I wanted an HR24 because it has a built-in Ethernet port for use with my iPad and the drop dead gorgeous DIRECTV app. The HR-25 does not, and I didn’t want to go down the DECA road.

DIRECTV HR24The DIRECTV HR24 HD DVR

That’s when I found out that when you sign up on the DIRECTV website for an upgrade, it’s pot luck. That’s right. DIRECTV will send you any DVR they like, so long as it’s compatible with the programming package you have. In my case, High Definition. I read one story at DBSTalk about a fellow whose new DVR smelled faintly of cigarette smoke — the units are recycled. I was concerned that I’d be stuck with either another HR22 or an HR25.

In a time when people stand in line for Apple products for sometimes days in advance, DIRECTV simplifies its inventory management by sending you whatever unit they please.

The Adventure Begins

I sent an e-mail to DIRECTV customer service about this, complained, and the agent confirmed the policy. But they also pointed me to a web page where I could find a list of local installers and satellite dish shops that sell the DVRs if asked. I also noted that the unit I wanted, but with errors in the specifications that worried me, was available at Amazon.com.* So that didn’t work.

Also, a few years ago, DIRECTV severed its retail relationship with Best Buy, so my local Best Buy, 10 minutes away, was no longer an option. So I called one of the shops listed, about a 40 minute drive away, and, yes, they could get me an HR24-500 overnight. But their credit card system was down. Could I bring cash? And the price was $50 more than DIRECTVs Internet offer of $149.

Sigh.

So the next day, I stopped by the bank, picked up cash, and drove for 40 minutes to this shop, picked up the HR24-500 DVR, and drove home. Total time was just under 2 hours. There is also a $49 charge to have an expert technician come out and configure the DVR. (I have a SWM system which makes configuration a bit more complex.)

When I questioned DIRECTV’s Robert Mercer, director of public relations, about the lengths to which I had to go, he wrote:

… In order to make sure we have an efficient upgrade process, retail stores no longer no longer sell equipment to existing customers.”

I surmise that customers who weren’t so tech savvy were buying equipment at, say Best Buy, that wasn’t compatible with their dish or programming or even home network, and so I can understand. Even so, efficient for whom?  It seems DIRECTV has backed itself into a corner by the way it designs its hardware. I can’t help but contrast this to the Apple TV. Plug it in, connect it to your TV with HDMI, and login. You’re done. One is last century technology and one is 21st century.

I also asked Mr. Mercer about why DIRECTV never offered to replace my 2007-era HR20. After all, I’ve been a customer for 14 years. Why not check my current equipment and programming, then send me an offer to pick out a new DVR of my choice? After all, it’s in DIRECTV’s best interest to get the best possible equipment into my hands. Sure, the equipment is leased, but I can’t believe they don’t make a little money on upgrades. If the company doesn’t, then something is wrong with the business model. Mr. Mercer wrote:

To address your question about why we don’t push equipment upgrades for existing customers: Equipment upgrades are driven by the programming that you choose. You pick the level of programming you want, then we supply the equipment that will support that programming.  If you decide to change or upgrade your programming, we’ll take a look at whether your equipment is compatible and upgrade if necessary. For example, your HR20 receiver is completely compatible with the programming choices you’ve selected.”

An Amazing Cultural Difference

What that tells me is that the DIRECTV culture doesn’t take pride in its equipment, doesn’t try to create a sense of enthusiasm in the customer for new technologies and will let TV equipment linger in the home until it slows to a crawl … or fails. And that probably explains, in turn, why everyone thinks the software is so crappy. There’s no incentive to create a great user experience. Instead, it’s all about content. I receive promotions weekly via e-mail trying to get me to upgrade my programming to, say, HBO or STARZ, but as for equipment? Just let it grow old, bogged down by mandatory software updates.

AirPlay & iPadApple TV & iPad - a powerful combo

I find the difference in approach between Apple and DIRECTV fascinating. Apple makes cool gear and even cooler software. When the second generation Apple TV came out, I knew I wanted one, ran down to the local Apple store, and gladly paid 99 bucks. (I also reviewed it.) I gave away the old Apple TV. And that new Apple TV was trivial to install, a joy to use, and has great software. The difference in user experience (and price) explains, for example, why we purchase and watch our movies on Apple TV and not via the DVR. DIRECTV doesn’t seem to get this part yet.

In addition, Apple is nibbling away at the edges of our TV experience with the iPad and AirPlay. Sitting in a cozy recliner with a cat and iPad in the lap is often more satisfying than firing up the big Plasma.

We’ve all talked about how Apple is constrained by its ability to sign deals for sports and programming content. Apple can make cool hardware, even an HDTV, but unless Apple can strike deals with the studios to deliver primary content, the Apple TV will always be a supplemental device. Even so, I see some serious holes in DIRECTV’s customer relationship model and their hardware technologies. In the long run, a persistent Apple will break through the barriers. The contrast in the way each company does business makes that evident.

Epilogue

Mr. Mercer had DIRECTV’s customer adjustment team contact me and apologize. But I was surprised. Any DIRECTV customer would have had to go through what I did, so there was nothing unusual about what happened. Even so, they offered me an adjustment to make up for what I paid for the HR24 and their best current upgrade deal, $99, and I took it.

Our family has enjoyed DIRECTV for 14 years now, but I don’t want to repeat this experience, and I can foresee a day when new technologies and new thinking will leave satellite TV behind. It will be interesting to watch DIRECTV and see if and how they respond. Apple will keep pushing, experimenting, developing and probing. That Disney’s Robert Iger is now on Apple’s board of directors bodes well. It’s only a matter of time before Apple, flush with a boatload of cash, is able to undermine this old-fashioned technology and customer relationship model.

__________

* Mr. Mercer mentioned that Amazon is not an authorized reseller of DIRECTV equipment.

Comments

skipaq

Thanks for sharing your experience. When we were full-time RVing a few years ago we had DirecTV one year and Dish Network for a few years. We did like the service from Dish a little better.

As far as comparing those services with the Apple TV we now use; Apple TV with iTunes and Netflix provides us the programming we want at lower cost. Apple TV is also a pleasure to use in comparison.

I do sense a difference in management style with the new team at Apple. The kind of exclusive deals that are made between the various parties today are a problem. I would hate to see more of the same in the future that would lock out one or more platforms from content just so one or the other can sell more phones, tablets or whatever.

Barry Conley

John,

IT all could have been avoided by working with a local DIRECTV dealer instead of a big box retailer and the 800# to a DIRECTV call center.

Apple will never have the channels necessary to compete with DIRECTV. The studios have already balked at AppleTV.

Nor will they have the technology to service accounts that are not able to stream video at high enough speeds without buffering problems.

Tom

Direct is competing with the local cable company at this point and not Apple. When you sign up for cable you get the latest iteration of cable box. A few years go by and cable has improved hardware but the cable subscriber is stuck with the box that they signed up with. The only way to get a newer box is to drive to the cable store and upgrade to a newer but more than likely recycled box.

Direct is just matching the policy of the competition.

When apple can figure out how to get cable like programming thru its apple tv or macs in no lag HD, Direct and the cable companies will cease to exist. Kind of like what netflix has done to blockbuster.

MackyMoto

The content providers, in this case DIRECTV, don’t want you to upgrade equipment because you’re paying a monthly fee to rent it. Once they’ve covered their equipment cost nut by way of your monthly fee payments, the rest is pure profit. Upgrading to new equipment ends that pure profit scenario until you’ve paid enough rental fees to cover the cost of the new equipment.

John Martellaro

MackyMoto.  That would take some time if it weren’t for the fact that DIRECTV also charges you cash up front for the leased unit. Sort of like a cell phone subsidy.  So the time to recover cost isn’t long. And these devices keep getting cheaper.

Apple can sell an Apple TV for $99 and make money. Throw in a 500 GB HDD for $30, and you have an HR24. (Add licensing and patent costs.)

This business model will contribute to the death of all the cable and satellite providers because Apple knows how to provide joyous experience all around.

iJack

I had been a DirecTV customer for years, and I would still recommend it as the best bang for the buck ? tier for tier, there is more useful programming than say, on Comcast.

But the main reason I got DirecTV was their monopoly on the NFL Sunday Ticket, a must-have for those of us that live far from our home team, and its broadcast area.  But at $400 for 16 games per week (x 16 weeks), it’s just too damned expensive, especially for those of us living on fixed incomes.  And I only want to watch my team, not all the others.

So about 18 months ago, I dumped the whole thing.  No TV at all.  I watch the shows I like on the network’s website, a day or two after they’ve been broadcast, and I’ve had to become, um, creative on how I watch my NFL games live.

I have always hoped that someday Apple would change the paradigm to the point where I would pay for what I watch, and only for what I watch.

That would be a whole new ball game.

Daryl Boyd

Hi,
  I am a former user of Directv and was happy for many years.  Then the prices began to rise and erode the advantages over cable.  Long story short, last year I cut the cord.  I was tired of paying over $70 a month to watch Sports Center twice a week along with some Nat Geo or History Channel stuff. 
  Boy was I in for a shock.  They charged my card, which I did not authorize for the price of the receiver alter all bill had been settled.  That would have been fine except that I OWNED the receiver.  When I called them to point this out, they stated I would get a refund within six to eight weeks.  To say I was less than satisfied would be a gross understatement. 
  Anyway, I have had my Mac Mini hooked to my 65 inch TV for three years so I just live off that and get local channels over the air.  The only real thing I miss is a larger variety of sports but the net is catching up slowly.  The Mini is very flexible and has been a good product not just a computer.  I really use it for an entertainment system and use my MacBook Pro for specific computer related needs.
  In the end it would take a great deal of work for any Cable or Satellite company to regain my business…but I will keep buying Apple products:)

Kitwana

I think your experience is something that is right in line with what I’ve been experiencing for the past few years with DirecTV.  at one time DirecTV was by far the superior choice over cable operators like Comcast which I loathe.  However, over the past 5 years I have started to witness a change in DirecTV as they have become MORE like Comcast.  If the rumors are true I look forward to the day when I can drop DirecTV in favor of a better service.  Besides watching TV the old-fashioned way has long since stopped in our household.  Almost everyone watches TV time shifted using a Macbook, iPad, iPhone, or iPod.  Almost no one including the kids watch a show at its scheduled time.

Ross Edwards

I canceled DirecTV half a year ago.  They keep extending me “retention credits” so I’ve had their service for free since then.  That strongly suggests that the fees they charge are pure cream and they already make nut on advertising, PPV, and/or other structural factors that are based partly or wholly on subscriber count. 

In any case, I’m ready to cut the cord and go IP-only… as soon as it costs me anything not to.  If you have DirecTV and you have completed your contract, I suggest calling them to cancel and seeing if they will extend you the same offer.  It includes my HD DVR and everything. (shrug)

Chuck

As I read John’s column, I nodded and thought “been there, done that.” My experience with DirecTV was slightly different. After five years as a DirecTV customer, I decided to purchase a newer DirecTV receiver - HR24 - from Solid Signal in Michigan, after DirecTV told me they could not guarantee to supply the HR24 that I wanted to replace the HR22. After four months of use, I received a super bundle offer from AT&T U-verse and eventually went with this company. When I called DirecTV to cancel service, I was told that, because I had purchased a new receiver, I was automatically bound to a two-year service renewal. Nothing I could do would convince them to make a clean separation. I was so P.O.ed with this customer service attitude that I agreed to a 20-month early penalty (something like $400.) I have been very happy with my current provider and will never recommend DirecTV to anyone who asks.

eric

There is no such thing as an HR25. There is however a H25 in circulation but that is only a high-def reciever, so it doesn’t do any DVR functionality. I thought you would have learned that in your online search for the newest best HD DVR. You were comparing apples to oranges.

Good article overall, my experience has been similar. As others have said I think the comparison really is closer to comparing Directv with cable companies rather than Apple. Have you ever seen the average comcast HD receiver? It’s HUGE compared to directv’s slim little H25. I have directv HD with a lower end HD tv and have to say my picture looks much better than my friends comcast HD who has a higher end tv. I think directv IS the leader in equipment, but you don’t get the perks unless your a BRAND NEW customer. Directv should have given you what you wanted after 14 years of service. Shame on Directv.

Marty

Just came here to say, Are you fucking high?

iJack

Are you fucking high?

Only on select transatlantic routes.

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