Case Assignment
In this case assignment, consider some key strategies recently
implemented by Dish in its effort to succeed and compete in its current
competitive environment. Discuss the strategic direction of the company
and whether you believe the organization to be on the right track.  Make
recommendations that you believe would help Dish to gain market share
(that is, hypothetically formulate what you think would be useful
strategies for Dish to consider).  Also comment regarding whether you
believe Dish operates in a socially responsible manner and whether their
CSR record helps or hinders their success.
Assignment Expectations
Your case assignment should be a minimum of 4 pages in length. 
You are required to use APA formatting and you are required to cite
and reference your sources.  There should be a minimum of three
reputable sources cited and referenced in your paper. 
Please make sure you review the assignment rubric prior to writing your assignment. 
51711b_satellite_tv_providers_in_the_us_industry_report.pdfSatellite TV Providers in the US December 2015   1
WWW.IBISWORLD.COM
Competition streaming in: The rising popularity of
online entertainment will slow revenue growth
IBISWorld Industry Report 51711b
Satellite TV Providers in the US
December 2015
Nick Petrillo
2
About this Industry
17 International Trade
2
Industry Definition
18 Business Locations
2
Main Activities
2
Similar Industries
20 Competitive Landscape
33 Industry Data
3
Additional Resources
20 Market Share Concentration
33 Annual Change
20 Key Success Factors
33 Key Ratios
4
Industry at a Glance
5
Industry Performance
23 Barriers to Entry
5
Executive Summary
24 Industry Globalization
5
Key External Drivers
7
Current Performance
32 Industry Assistance
33 Key Statistics
20 Cost Structure Benchmarks
22 Basis of Competition
34 Jargon & Glossary
25 Major Companies
10 Industry Outlook
25 DirecTV Inc.
12 Industry Life Cycle
26 Dish Network LLC
14 Products & Markets
29 Operating Conditions
14 Supply Chains
29 Capital Intensity
14 Products & Services
30 Technology & Systems
15 Demand Determinants
30 Revenue Volatility
16 Major Markets
31 Regulation & Policy
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
Satellite TV Providers in the US December 2015   2
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About this Industry
Industry Definition
Companies in this industry distribute
television (TV) programs on a
subscription or fee basis through direct
broadcast satellites. The industry also
includes multipoint distribution system
operators that deliver wireless TV
Main Activities
The primary activities of this industry are
programming using ground stations.
These companies operate in rural areas
and have a negligible effect on industry
performance. This industry excludes
broadcast TV networks and other satellite
telecommunications providers.
Providing basic satellite TV programming
Providing premium and pay-per-view satellite TV programming
Leasing or retailing digital video recorders and set-top boxes
The major products and services in this industry are
Basic programming
DVR service
HD channels
Video on demand
Other
Similar Industries
51511 Radio Broadcasting in the US
This industry includes radio broadcasting stations, networks and syndicates that transmit audio
programming through AM, FM and satellite radio channels.
51512 Television Broadcasting in the US
This industry operates studios and facilities that program and deliver audiovisual content to the public via
over-the-air transmission.
51521 Cable Networks in the US
This industry includes companies that operate studios and facilities to distribute TV programs on a
subscription or fee basis through cable.
51741 Satellite Telecommunications Providers in the US
This industry provides telecommunications connections via satellite for broadcasters and other
telecommunications providers. This industry excludes direct-to-home satellite TV services.
51791b Radar & Satellite Operations in the US
The industry works with companies that provide satellite telecommunications services, telemetry and
tracking and control services. It also operates radar stations and satellite terminal stations.
51711a Cable Providers in the US
This industry delivers TV programming received from cable networks or local TV stations via cable systems
on a subscription basis.
Satellite TV Providers in the US December 2015   3
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About this Industry
Additional Resources
For additional information on this industry
www.fcc.gov
Federal Communications Commission
www.nielsen.com
Nielsen
www.sbca.com
Satellite Broadcasting & Communications Association
www.satbiznews.com
Satellite Business News
IBISWorld
writes over 700 US
industry reports, which are updated
up to four times a year. To see all
reports, go to www.ibisworld.com
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
4
Industry at a Glance
Satellite TV Providers in 2015
Key Statistics
Snapshot
Revenue
Annual Growth 10-15
Annual Growth 15-20
Profit
Wages
Businesses
$52.8bn
7.1%
$9.6bn
$2.9bn
Number of cable tv subscriptions
Revenue vs. employment growth
Dish Network LLC
29.4%
% change
DirecTV Inc.
53.3%
16
106
12
104
102
8
Millions
Market Share
4
0
-4
Year 07
4.0%
25
100
98
96
09
Revenue
11
13
15
17
19
21
94
Year 06
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2015)
2.3%
4.0%
Key External Drivers
DVR service
Number of cable
TV subscriptions
Other
22.1%
Per capita disposable
income
39.5%
HD channels
Basic programming
Number of mobile
internet connections
Number of households
Consumer
Confidence Index
32.1%
p. 5
Industry Structure
Video on demand
Life Cycle Stage
Revenue Volatility
SOURCE:
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SOURCE:
WWW.IBISWORLD.COM
Growth
Regulation Level
Heavy
Low
Technology Change
High
Capital Intensity
High
Barriers to Entry
High
Industry Assistance
None
Industry Globalization
Low
Concentration Level
High
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Satellite TV Providers in the US December 2015   5
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Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive
Summary
Satellite television (TV) providers
distribute TV programs on a
subscription or fee basis through direct
broadcast satellites. New networks,
more channels and bonus features have
strengthened the industry despite shaky
subscriber growth rates in recent years.
The introduction of high-definition TV
improved the quality of programming
and attracted subscribers to highermargin packages. IBISWorld expects
higher spending on industry services to
result in revenue growth of 7.1% over the
five years to 2015. However, in 2015,
revenue is expected to increase at a
slower 4.2% to $52.8 billion, as large
investments raise expenses and offset
the positive influence of increased prices
and subscriptions.
Companies in the industry fight in a
saturated market invaded by external
competition. With satellites already in
orbit, major players incur low costs per
additional subscriber, keeping profit
healthy. However, the cost of acquiring
and maintaining subscribers has
increased, and stiff competition prevents
providers from passing costs on to
customers. Progressive technologies have
advanced the quality and speed of
direct-broadcast satellite transmissions,
increasing the medium’s marketability.
New online services and mobile app
devices are mitigating losses stemming
from customers migrating to online
streaming. Nevertheless, the threat from
these external competitors is expected to
increase as internet streaming companies
acquire and produce original content,
shoving their way into the industry.
Telecommunication providers have
thrust themselves into the contest, with
AT&T acquiring DirecTV and expanding
the company’s services into a range of
telecommunications spheres.
The growing availability of online
content, along with an expanding
market for connected devices, internetconnected TVs and emerging mobile
technologies, will continue to pose a
threat to traditional TV. The ability of
the major players that survive the
competition and continue developing
ways to retain and attract subscribers
will determine industry revenue growth.
With a slower annual rise in demand
from subscribers, IBISWorld forecasts
revenue will increase at a slower
annualized 4.0% to $64.2 billion over
the five years to 2020.
Number of cable TV subscriptions
The cable industry, which competes
directly with satellite TV providers, has
been bundling TV services together with
internet, telephone and other home
services to generate higher demand and
average revenue per subscriber. As cable
attracts consumers, market potential for
satellite providers shrinks. The number
of cable TV subscriptions is expected to
decrease slowly in 2015.
Per capita disposable income
Satellite TV services are a discretionary
purchase for most consumers. As a result,
the industry is very sensitive to changes in
economic activity. Lower disposable
income during periods of economic decline
hurt the industry’s ability to hold onto
existing subscribers and attract new ones.
Per capita disposable income is expected to
increase during 2015, representing a
potential opportunity for the industry.
The
growing availability of online content will
continue posing a threat to traditional TV
Key External Drivers
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Industry Performance
Number of mobile internet connections
Over the past five years, broadbandenabled mobile devices, such as
smartphones and tablets, have
proliferated throughout the United
States. As mobile broadband connections
have become more ubiquitous and
reliable, consumers are increasingly
using these devices to stream online
content, intensifying the external
competition satellite providers will face.
Mobile internet connections are expected
to increase during 2015, representing a
potential threat to the industry.
Number of households
The industry’s primary market is
residential households. Thus, household
formation provides a natural increase in
potential demand for satellite services.
However, competition in this market is
intense, as robust broadband connections
and faster wireless internet services are
increasingly bundled with cable TV
subscriptions. The number of households
is expected to increase during 2015.
Consumer Confidence Index
Changes in consumer sentiment directly
affect discretionary expenditure,
particularly on high-priced, value-added
services. These expenditures decline
when economic activity falters, as
consumers opt to pay down loans, build
their savings and conserve available
income for basic needs. The consumer
sentiment index is expected to increase
in 2015.
Per capita disposable income
Number of cable TV subscriptions
106
3
104
2
102
1
% change
Millions
Key External Drivers
continued
100
98
96
94
Year 06
0
-1
-2
08
10
12
14
16
18
20
-3
Year
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015   7
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Industry Performance
The Satellite TV Providers industry
operates within the larger broadcast
distribution sector, offering TV programs
on a subscription or fee basis through
direct broadcast satellites. Industry
operators have competed favorably over
the past five years by offering leading
picture quality and customer service, as
well as the largest array of content. Prior
industry investments in secondary and
tertiary transmission systems, as well as
developments in data compression and
signal strength, allow the industry to
provide much higher quality services
than a decade ago. Over the five years to
2015, new networks, more channel
offerings, apps and bonus features are
expected to increase industry revenue at
an annualized rate of 7.1% to $52.8
billion. This growth will be hindered by
new and fierce competition emerging
from online streaming companies that
have been cutting into the number of
Industry revenue
12
10
% change
Current
Performance
8
6
4
2
Year 07
09
11
13
15
17
19
21
SOURCE: WWW.IBISWORLD.COM
satellite TV subscribers. In 2015, revenue
is expected to increase by a relatively
slim annualized 4.2% as consumer
preferences shift to cable-bundled
packages and online streaming
companies, but customers will pay more
for monthly services.
Companies in this industry face high
Profitability
fluctuates temporarily initial costs, but then experience low
costs per additional subscriber. Most
industry operators outsource in-home
product installation and setup services,
such as services for satellite dishes and
digital video recorders. DirecTV is also
investing in the construction of new
satellites. As a result, with all other costs
remaining equal, this industry earns a
higher proportion of profit from each
additional subscriber’s revenue than the
Cable Providers industry (IBISWorld
report 51711a). With subscriber growth
stalling in recent years, the Satellite TV
Providers industry’s average profit
margin has been inconsistent.
Despite a projected increase to 18.2%
of industry revenue in 2015, profit growth
was not steady in the years leading up to
2015. To capitalize on the wave of
consumers switching providers (analog
TV broadcasts have been entirely phased
out), many companies used
advertisements to highlight the extra
content provided by satellite versus cable.
Satellite TV providers have also
continued to leverage exclusive
programming, including DirecTV’s NFL
Sunday Ticket, to gain subscribers.
Satellite vs. cable
Satellite TV providers compete directly
with operators in the Cable Providers
industry. The competition between these
two industries is particularly intense, as
they offer similar TV programming to
consumers. In terms of availability, a
home must be prewired for cable TV, so
consumers in remote locations often lack
the option of subscribing to cable
services. To receive satellite TV,
Satellite TV Providers in the US December 2015   8
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Industry Performance
Satellite vs. cable
continued
homeowners must install a dish in a place
with an unobstructed view of the
southern sky.
Cable companies have increased their
competitiveness with the advent of
fiber-optic technology, which enables
companies, such as Verizon and Comcast,
to provide high-speed, digital-quality TV
subscriptions similar to traditional cable,
but with higher-quality feeds. However,
because satellite TV providers do not
have to wire multiple houses to provide
their services, they incur lower costs per
subscriber. As a result, the industry
typically outperforms the cable industry
in terms of price.
Operators in the Satellite TV Providers
industry have also taken steps to gain a
competitive edge in providing superior
customer service. In line with subscriber
Streaming becomes a
serious threat
As internet speeds increase and data
compression technologies become more
widespread, streaming video has become a
viable alternative to watching TV. With a
large increase in the number of consumers
with wired broadband connections and
broadband-enabled mobile devices, a
significant amount of video content has
become available through the internet.
Some examples of legitimate streaming
services that compete directly with
subscription TV include Netflix, Amazon,
YouTube and Hulu Plus. These services
offer ways to bring entertainment from
the computer onto the TV screen and
allow consumers to stream TV shows and
movies directly to their TVs, computers or
wireless devices.
Nonetheless, many of these services
do not yet offer enough content to fully
substitute a TV subscription. For
example, live sporting events are often
not available for streaming through
these channels. Additionally, the quality
and reliability of streaming services are
lower than that of satellite TV. Although
growth, the industry has hired more
employees to improve customer
relations. As a result, the number of
industry employees has increased at an
annualized rate of 4.3% to 30,088
workers over the five years to 2015.
Consequently, total industry wages are
expected to increase at an annualized rate
of 6.1% to $2.9 billion over the same
period. The number of establishments is
expected to increase 3.5% over the
five-year period, reaching 120 locations
in 2015, which has contributed to
employment increases. The number of
highly skilled engineers and technicians
has increased significantly as companies
attempt to offer new innovative products
and lower skilled employment increased
with companies focusing more on
customer service.
Online
streaming has
not yet hurt satellite TV
demand due to these
services’ limited content
the number of people streaming online
video has steadily increased over the
past five years, a majority of video is still
watched on a traditional TV set.
Although the threat from streaming
video was negligible for the industry in
the past five years, streaming video will
pose an inevitable threat to the industry
in the future, as wired and wireless
internet connections continue to
improve and consumers switch to
broadband-enabled mobile devices.
Additionally, Netflix, Amazon and Hulu
are each investing in original
programming that has received both
popular and critical appeal. These new
developments are expected to negatively
influence future revenue growth as
Satellite TV Providers in the US December 2015   9
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Industry Performance
Streaming becomes a
serious threat
continued
consumers migrate to other forms of
content distribution.
Although alternatives to cable and
satellite TV are limited in content
availability, operators have scrambled to
offer viable alternatives to the new
external competitors. In August 2013,
DirecTV launched its own Pivot TV
Everywhere app to allow subscribers to
watch the service live on computers,
smartphones and tablets. Dish followed
suit by offering Dish Anywhere, a
website that allows customers to
instantly watch TV shows and movies,
along with the Dish Anywhere App that
allows the content to be viewed on a
smartphone or tablet.
The balance of media services is
constantly being shifted and reevaluated
as cross-industry acquisitions and deals
create a more widespread fight for
consumers’ living rooms and mobile
devices. According to Nielsen, nearly half
of smartphone and tablet owners use
their devices as second screens while
watching TV every day. TV networks,
such as AMC Networks, are even
launching second-screen content. The
rise in mobile video watching has made
the market even more dynamic and
prompted a rush of all
telecommunications, cable and satellite
companies to be the first to reach
consumers’ pockets. AT&T acquired
DirecTV in 2015, marking a new
convergence of broadband internet and
video services. DirecTV has also made
strategic investments in LiveClips, a
technology company that develops and
delivers video content from live sporting
events for any internet-enabled device,
and i.TV, a social TV and second screen
platform that enables customers to watch
and engage with TV. Dish went one step
further, signing an accord with the Walt
Disney Company in 2014, allowing the
company to offer programming over the
web, a first for a US cable or satellite
provider, and a potential answer to the
Netflix threat.
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Industry Performance
Industry
Outlook
Although new household formation and
increasing per capita disposable income
are expected to drive revenue growth
over the next five years, the number of
households that sign up for pay-TV
services is expected to decrease slowly.
Dish reported in its 2014 annual report
that the company had lost 79,000 net
pay-TV subscriptions in 2014. This news
comes a year after the company
announced a miniscule 1,000 net
additions in pay-TV subscribers in 2013.
This continued decline presents a
significant challenge to the industry, with
industry revenue forecast to increase at a
milder annualized rate of 4.0% to $64.2
billion over the five years to 2020.
Increasing competition from online
streaming companies over the next five
years is anticipated to stimulate spending
on marketing and new product
development, which will likely cut into
the extra revenue generated from new
subscriptions. Furthermore, amid this
competitive environment, industry
providers will likely be unable to pass
rising programming costs onto their
subscribers. With high programming
costs and mergers and acquisitions, profit
is forecast to decrease over the coming
five years. Satellite uplink costs (i.e.
transmitting between earth stations via
Increased
multiplatform
streaming
Multiplatform viewing will continue to be
a competitive external threat to the
industry. More than 45.0% of the
population views content on mobile
devices, according to the research
company Nielsen, indicating the already
widespread appeal and accessibility of
streaming videos. While consumers have
not entirely substituted streaming video
for satellite TV services yet, the industry
will evolve its services to provide
consumers with added value as the
amount of content offered through this
new medium increases.
satellite) and investment in new
equipment and facilities to support the
subscriber base will also contribute to a
lower industry profit margin.
While some consumers prefer to pay
extra for more content, others will look
to save money at the cost of bonus
features and added channels. With
tiered packages for channels, satellite TV
providers are best able to walk the fine
line between pricing and quantity of
services. Providers are expected to
entice digital screen consumers by
offering slimmed-down bundles to
replace the expensive ones that offer
hundreds of channels. IBISWorld
expects that the industry will develop
additional tiers of service or enable
consumers to better customize their
features as a way of maximizing revenue.
As the industry better develops customer
services and focuses on quality,
additional uplink facilities and call
centers are expected to facilitate
industry expansion, causing
establishments to continue growing at
an annualized rate of 2.1%, reaching an
estimated 133 locations in 2020.
Consequently, industry employment is
anticipated to increase at an annualized
rate of 3.8% to 36,287 workers in the
same five-year period.
Multiplatform
viewing
will continue to be a
competitive external threat
to the industry
One way satellite TV providers have
been able to mitigate the threat of
streaming content over the internet has
been through offering their own streaming
content free to subscribers of their
services. Over the next five years,
Satellite TV Providers in the US December 2015   11
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Industry Performance
Increased
multiplatform
streaming
continued
operators are expected to take steps to
monetize that online content by selling
advertising space. Advertisements will
appear throughout the consumer’s content
streaming experience, during live
programming as well as content viewed on
demand. This developing trend is evident
in DirecTV’s strategic 2013 investment in
video advertisement company FreeWheel,
which provides a platform for ad insertion
in on-demand and live video feeds online.
DirecTV has also ventured into the mobile
app space, launching the first Pivot TV
app offering a live feed of the network, as
well as programming on demand on
portable devices. Dish followed suit,
offering Dish Anywhere to watch online
and the Dish Anywhere app to watch on
smartphones and tablets.
Industry efforts will be met with
heavy resistance, as online streamers
Niche appeal
Smaller industry players will continue
to rely on niche audiences for the bulk
of their revenue. This segment is
forecast to expand as existing providers
find new ways of attracting an
increasingly diverse American
audience. Companies specializing in
providing multicultural programming
will need to increase their offerings as
more international content becomes
readily available online, as well as
through traditional cable companies.
Similarly, satellite broadcasters will
need to communicate with growing
multicultural audiences to convey the
full value of their offers.
Sports fans represent a key niche
market for satellite providers. By offering
extensive sports channels at a higher
price, providers are already maximizing
continue to push their way into the TV
space, providing faster and more
reliable connections as well as original
content. Furthermore, streaming
set-top boxes, such as the Roku, Apple
TV and Chromecast, allow users to
bring content available on the web,
from any browser tab, to the TV screen.
Responding to these changes,
consumers are increasingly cutting the
cord and watching their TV programs
exclusively online. The relatively new
development of the smart TV, which
focuses on online interactive media,
internet TV and streaming media, is
also a threat to the industry. As online
streamers find new and efficient ways
to provide consumers with the speed,
reliability and variety of shows they are
seeking, TV providers are expected to
see lower rates of revenue growth.
Smaller
industry players
will continue relying on
niche audiences for the
bulk of their revenue
revenue from this subscriber segment.
For example, DirecTV began a
partnership with the NFL in 2011 to offer
a comprehensive NFL game package,
NFL Sunday Ticket. With the advent of
3D TV, this industry has a unique
opportunity to offer an even more
exclusive package to fans. Producing a
live sports show is expensive and requires
cameras at several angles to accurately
portray what is happening on the field or
court to TV audiences.
Satellite TV Providers in the US December 2015   12
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Industry Performance
Life Cycle Stage
Industry value added is projected to grow
faster than GDP in the 10 years to 2020
The industry is adapting new technologies
to expand its subscriber base
% Growth in share of economy
Industry employment is expanding as providers seek
to capitalize on advertising and customer service
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic
importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Growth Industry
Revenue grows faster than the economy
Many new companies enter the market
Rapid technology & process change
Growing customer acceptance of product
Rapid introduction of products & brands
10
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
technology change
5
Satellite TV Providers
Cable Networks
Communication Equipment Manufacturing
Television Broadcasting
0
Radio Broadcasting
Movie & Video Production
Decline
-5
Shrinking economic
importance
-10
-10
-5
0
5
10
15
20
% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM.AU
Satellite TV Providers in the US December 2015   13
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Industry Performance
Industry Life Cycle
This
industry
is G
rowing
The Satellite TV Providers industry is in
the growth phase of its life cycle. Despite
its sluggish subscriber growth, the
industry is taking full advantage of
economies of scale and scope. Industry
value added, which measures the
industry’s contribution to the overall
economy, is expected to increase at an
annualized rate of 3.5% over the 10 years
to 2020. In comparison, GDP is forecast
to grow at an average annual rate of
2.2%. Clients are slow to shift preferences
and adopt products of the new external
competitors, and the industry has
thwarted the increasing number of online
threats through acquisitions and
consolidations with cellular networks and
internet service providers.
Industry employment is forecast to
continue growing at a healthy pace as
satellite TV providers hire more staff to
capitalize on a budding trend within the
industry: the sale of advertising space. As
companies continue to provide digital
content to consumers over the internet
and broadband-enabled mobile devices on
an on-demand basis, the potential to
advertise over this transmission medium
is enormous. Providers are now able to
offer targeted one-to-one advertising,
down to the household level, based on
subscribers’ demographic profiles and
browsing history. As the amount of digital
content that satellite TV providers make
available over the internet increases,
advertising is expected to bring a
temporary revenue stream to the industry.
As consumers increasingly use online
streamers to watch TV shows and movies,
satellite TV providers are expected to face
increasing competition. A growing
number of consumers are expected to
drop or reduce their traditional
multichannel video programming
subscription package, decreasing profit
margins and slowing revenue growth.
Satellite TV Providers in the US December 2015   14
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Products & Markets
Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES
99
Consumers in the US
Satellite TV providers distribute their services to end users via direct-broadcast satellite
technologies.
KEY SELLING INDUSTRIES
Products & Services
33422
Communication Equipment Manufacturing in the US
Satellite TV providers buy broadcasting equipment from communication equipment
manufacturers.
51211a
Movie & Video Production in the US
Satellite TV providers buy motion pictures and videos from movie and video producers.
51211b
Television Production in the US
Satellite TV providers buy TV series and made-for-TV movies from TV producers.
51212
Movie & Video Distribution in the US
Satellite TV providers buy audiovisual productions from movie and video distributors.
51791b
Radar & Satellite Operations in the US
Satellite TV providers lease satellite equipment from radar and satellite operators.
Products and services segmentation (2015)
4.0% 2.3%
DVR service Other
22.1%
HD channels
39.5%
Basic programming
32.1%
Total $52.8bn
Video on demand
Satellite TV providers offer several
services in addition to basic TV
programming. Such services are generally
bundled together in packages; therefore,
revenue is not divisible by the number of
services purchased. Instead, IBISWorld
estimates the extent to which people use
such services. In general, satellite TV
providers earn revenue from monthly
subscriptions to basic and premium
programming; video-on-demand and
SOURCE: WWW.IBISWORLD.COM
pay-per-view services; monthly fees from
leased videos or equipment fees from
purchased digital video recorders
(DVRs); and set-top receivers; and
advertising services. Revenue from
advertising accounts for a small, but
increasing, portion of industry revenue.
Basic programming and HD
Two sectors that are growing in
popularity, albeit at a slower rate than in
Satellite TV Providers in the US December 2015   15
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Products & Markets
Products & Services
continued
Demand
Determinants
previous years, include basic
programming and high-definition (HD)
channels. The number of subscribers
interested in obtaining basic services has
risen, while video-on-demand and DVR
services face increasing demand and
heavy competition from alternative
services like Netflix and Hulu. Other
services that this industry provides
include content-specific features like
DirecTV’s ScoreGuide, which keeps track
of scores and start times of major
matches for fans. As more programming
is introduced, this product segment is
expected to expand as a portion of
revenue. However, the increasing cost of
carrying programming is a challenge that
the industry must contend with to remain
competitive. Operators throughout the
broadcast distribution sector have been
vertically integrating or forming
partnerships with upstream content
producers to mitigate the negative effect
of rising programming costs.
Similarly, movies and TV shows can be
purchased and accessed on an ondemand basis. This product segment has
increased in prominence over the past
five years as content has been
increasingly viewed on broadbandenabled mobile devices. While this trend
has the potential to siphon revenue and
subscribers away from the industry, the
industry’s major players have introduced
their own mobile streaming content (tied
to a monthly subscription) to soften this
competitive threat.
Video-on-demand
The major satellite companies attract a
particularly wide audience by providing a
multitude of content-specific
programming (e.g. sports channels) and
add-ons. For consumers who do not
subscriber to a particular value-added
programming package, live content can
be purchased on demand for a fee.
DVR services and other
Satellite providers also garner revenue
through fees that they charge subscribers
for multiple leased or purchased set-top
receivers, warranty service fees and
advertising services. As the industry
continues to stream digital content over
mobile devices and make digital content
available over the internet, the potential to
advertise over on-demand and live
streaming video is huge. Advertising is
expected to account for an increasing
portion of industry revenue, in line with
DirecTV’s stated focus to generate a
greater share of revenue from commercial
and local advertising. Indeed, in 2013
DirecTV announced a strategic investment
in and partnership with FreeWheel, a
platform for dynamic ad insertion in
on-demand and live video feeds online.
Since the majority of this industry’s
customers are residential households,
demand is influenced by trends that affect
the disposable incomes of families and
private individuals. Satellite TV is
particularly popular among families, and
the industry’s growth can be tied to the
number of new families with young
children. When the number of residential
households increases, the size of the
industry’s potential market among these
new households increases, naturally
leading to an increase in demand for
satellite TV discretionary services.
Consumer disposable income also
influences demand; during times of higher
per capita disposable income, demand for
satellite TV services increases.
The growing popularity of other
alternative methods of consuming media
can have a directly negative impact on
satellite TV providers. An increasing
number of cable TV subscriptions
negatively affects demand for satellite TV
Satellite TV Providers in the US December 2015   16
WWW.IBISWORLD.COM
Products & Markets
Demand
Determinants
continued
services since both are substitute goods;
when a cable provider gains a subscriber,
the Satellite TV providers industry has
lost either a potential customer or a prior
subscriber to satellite TV. Additionally,
cable TV providers offer bundles of
services, including phone and internet,
which can retain customers who wish to
have their home phone and broadband
internet bills consolidated into a single
package. Satellite TV providers have
attempted to mimic this customer
retention model by introducing their own
packages; DirecTV was acquired by
telecommunications provider AT&T in
2015, with the goal of providing
competing satellite and home phone
bundles to customers.
Externally, the number of mobile
internet connections has also had a
negative effect on industry demand. As
broadband-enabled mobile devices have
proliferated throughout the United
States, an increasing number of
consumers have canceled their pay-tv
subscriptions and opted instead to
stream content through the internet.
Companies like Netflix, Amazon, Google
and Apple are all attempting to move
into the TV market. Netflix and Amazon
have even released several originalcontent TV series, several of which have
been highly critically acclaimed. Apple
launched Apple TV and Google launched
Chromecast to allow users to bring
online entertainment to their TV
screens. Smart TV interfaces allow users
to get instant access via their television
to the content stored on their streaming
services. To date, the number of
consumers that view content solely
through the internet remains small. The
cord-cutting trend, however, is expected
to accelerate moving forward. As
internet connections become faster and
more reliable and a greater number of
video-on-demand streaming services are
introduced, the satellite TV industry will
shrink at an increasing speed.
Demand for industry services is also
driven by the introduction of new
channels, programs and content from
satellite TV providers. To attract and
retain consumers, distributors require an
array of networks and channels and
continuously must introduce new and
alluring programming. Therefore,
distributors demand network
programming that has wide appeal with
households over a large geographical
area, either nationally or in a regionally
concentrated area. Some programming
cost discounts are offered to the larger
satellite TV providers due to their ability
to provide services over a larger
geographic area and their larger
subscriber base. Also, satellite services
are increasingly being bundled with
telephone, internet, interactive-TV,
video-on-demand and DVR services to
increase demand and reduce the
subscriber churn rate.
Major Markets
A narrowing proportion of US households
subscribe to satellite TV, and a thinning
proportion of the industry’s revenue is
derived from basic TV services.
Historically, a higher proportion of older
viewers have been attracted to this medium
because they are more likely to live in rural,
isolated areas that are not wired for
competing broadband cable services. They
are also less likely to adapt quickly to newer
technology. However, satellite TV offers
more advanced services because it reaches
a broader variety of households. Satellite
TV services appeal to multicultural
audiences with interests in the foreignchannel offerings. As a result, the industry’s
audience is also more ethnically diverse
than the overall population.
Younger consumers represent a
dwindling percentage of the industry’s
Satellite TV Providers in the US December 2015   17
WWW.IBISWORLD.COM
Products & Markets
Major Markets
continued
Major market segmentation (2015)
3.6%
14.5%
Consumers aged
24 and younger
Consumers aged 25 to 34
24.2%
Consumers aged 65 and older
17.5%
Consumers aged 35 to 44
20.7%
Consumers aged 45 to 54
Total $52.8bn
International Trade
19.5%
Consumers aged 55 to 64
SOURCE: WWW.IBISWORLD.COM
consumer base. Much in the same way
that cord-cutters have abandoned
broadband cable subscriptions in favor of
more affordable alternatives such as
online streaming services and over-thetop channel subscriptions, satellite TV has
also been threatened by these emerging
methods of consuming media. Younger
consumers have been the most receptive
to this switch, and some consumers
(referred to as “cord-nevers”) have
embraced online streaming media without
ever having been a cable subscriber.
Consumers aged 24 and younger
represent a minimal 3.6% of the industry’s
consumers, while consumers between the
ages of 25 and 34 represent a more
significant 14.5% of the industry’s base.
The industry’s eldest consumers represent
an increasingly high proportion of satellite
TV viewers. Viewers between the ages of
55 to 64 represent 19.5% of customers,
while consumers older than 65 represent
an industry-leading 24.2%. Many older
consumers represent a generation that
had embraced satellite TV as an
alternative to cable TV, particularly when
satellite emerged in the 1990s as a
significant and technologically viable
alternative to traditional TV viewing.
These consumers, however, have been
reluctant to pursue cord-cutting and have
grown as a percentage of the industry’s
customer base over the past five years.
Due to the service-based nature of this
industry, satellite TV providers do not
participate in international trade.
However, companies in this industry
do air international programming from
foreign markets such as Canada,
Mexico and the UK. By offering foreign
language and cultural channels, these
companies can generate revenue from
a wider multilingual audience.
Expanding the industry’s
multicultural viewing options creates
a broader audience base and increases
revenue potential.
Satellite TV Providers in the US December 2015   18
WWW.IBISWORLD.COM
Products & Markets
Business Locations 2015
West
New
England
AK
0.5
Great
Lakes
WA
ND
MT
2.0
Rocky
Mountains
ID
OR
1.3
West NV
0.6
1.8
SD
0.3
WY
0.5
MN
0.2
0.5
Plains
CO
0.7
KY
1.4
9
OK
1.5
NC
3.2
TN
AZ
NM
1.2
0.6
Southwest
TX
7.6
HI
0.3
Additional States (as marked on map)
1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.4
1.1
0.7
3.1
2.7
0.4
SC
Southeast
1.0
MS
AL
1.5
1.4
GA
3.0
1.0
LA
1.3
FL
5.2
Establishments (%)
0.3
1.9
AR
8
0.9
1.9
9.2
7
WV VA
3.4
1.5
2.4
CA
West
3.8
MO
KS
2.0
OH
2.1
4.3
6
4.6
IN
IL
0.6
UT
PA
2.9
1.5
0.8
1 2
3
NY
5.9
5 4
MI
2.3
IA
NE
0.3
WI
ME
MidAtlantic
9 DC
0.4
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015   19
WWW.IBISWORLD.COM
Products & Markets
Distribution of establishments vs. population
30
20
10
Southwest
Southeast
Plains
New England
Rocky Mountains
Establishments
Mid-Atlantic
Great Lakes
0
West
Satellite TV providers do not need to rely
on business location to succeed. While
some larger content production and
administrative operations are conducted
near major content providers in New
York City or Los Angeles, the provision of
satellite TV can be spread throughout
virtually all parts of the contiguous US
states. Satellite reception strength is very
strong and in some cases can be more
reliable that standard broadcast
reception. In addition to programming
centers, most providers also operate
several uplink facilities to connect with
satellites in orbit and ensure the smooth,
continual transmission of broadcasts. As
a result, satellite TV is readily available
for most consumers and is therefore
spread throughout the US in line with
regional populations. For example, the
Southeast is the most populous region of
the US and carries 25.5% of the country’s
population. It also represents the most
dominant region in terms of the
distribution of satellite TV providers, at
25.3% of the industry’s total. Conversely,
the Rocky Mountains represent a very
small of the US population (4.1%) and
also hold the smallest percentage of
industry establishments (4.0%).
The Satellite TV providers industry
historically experiences a greater
proportion of satellite subscribers as a
percentage of the state’s population in
less populous states when compared
with the subscription rates of larger
states. That is to say, small states such
as Kansas, which possesses 0.9% of the
US population, actually holds a
%
Business Locations
Population
SOURCE: WWW.IBISWORLD.COM
relatively large 1.4% of the industry’s
establishments. In comparison,
California represents the largest US
state in terms of population (12.2%),
but holds a relatively slim 9.2% of
industry establishments. This
phenomenon is due to the technological
advantage that satellite TV providers
hold over broadband cable providers in
remote areas. Since cable broadband
cannot be routed to homes located far
from nearby municipal cable and
electric infrastructure, as is more often
the case in rural states, it is far more
convenient for homes to install dishes
into older houses that lack cable
connectivity. This has led the industry
to hold a significant marketing
advantage in smaller states.
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
20
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration
in
this industry is H
igh
Key Success Factors
IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
The Satellite TV Providers industry has
a high level of concentration, with the
top two companies, DirecTV and Dish
Network, accounting for about 82.6% of
the total market. Over the past five
years, these companies have
successfully expanded their scope and
revenue by offering an increasing array
of services and continually improving
their quality. These two major satellite
providers feature about 200 HD
channels and various on-demand
services, such as digital video
recording. This industry is highly
concentrated due to the high fixed costs
involved in developing, launching and
maintaining satellites.
Due to high start-up costs, regulation
and intense competition, few small
producers have managed to develop a
niche market. Such companies typically
vie for specific target audiences, such as
religious or immigrant viewer groups, by
providing channels specific to their
interests or culture. These smaller players
are able to survive in the industry, but do
not compete directly with the major
players. Consequently, IBISWorld
expects industry concentration to remain
high over the next five years.
Close monitoring of new competition
Companies must monitor competition in
the cable and satellite markets for
delivery of network channels and
audience acceptance. Content is
increasingly being delivered through a
number of other media formats in
addition to traditional channels.
preferably ahead of their competitors, to
attract new customers and retain
existing ones.
Having a loyal customer base
Establishing a strong and loyal customer
base within national, regional or even
international areas of operation is crucial
to maintaining steady cash flow.
Maintaining excellent customer services
Maintaining a reputation for fast and
efficient customer service is crucial to
retaining customers. Customers that do
not have reason to complain about their
services will not need to be swayed or
convinced to remain a customer through
price discounts.
Ability to quickly adopt
new technology
Companies must adopt the newest
technology to provide continually high
quality services in a timely fashion,
Ensuring pricing is competitive
It is essential to monitor prices across
basic and higher-price, value-added
services, especially for subscriber
acceptance and adoption. Customers may
be willing to pay more for a service which
they perceive as having a higher value.
The costs associated with building,
launching and maintaining satellite
constellations are extensive. During the
construction and launch phases of
satellite development, providers’
profitability shrinks, while depreciation
and purchase expenses increase.
However, once satellite networks are
operational, well-established companies
with large subscriber bases experience
high profit margins. Due to the industry’s
high concentration (Dish and DirecTV
effectively control the national market),
the average industry cost structure is in
line with the two major players’
operational expenses.
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
21
Competitive Landscape
Profit
Industry profit, defined as earnings
before interest and taxes, is expected to
average 18.2% of revenue. Over the past
five years, profit has swelled because
providers spent a smaller portion of their
earnings on satellite launches and
updates. However, in 2013, average profit
in the industry decrease due to Dish
Network’s depressed margins; Dish’s
margins first decreased in 2012 primarily
due to $730.0 million of litigation
expenses. Higher programming costs and
increased advertising associated with the
Hopper set-top box have also hindered
Dish’s profit; however, this decrease is
not expected to have a long-lasting
impact on average industry profit.
While subscriptions and on-demand
revenue have grown over the past five
years, marketing costs have increased as
companies continue to vie for viewership
amid increasing competition and rising
programming costs. Heightened
competition has also prevented providers
from passing increasing costs on to
subscribers, pressuring profitability. As
these costs continue to rise, profit growth
is forecast to be relatively flat over the
next five years.
Purchases
Purchases account for about 36.5% of total
industry revenue and primarily include the
cost of carrying different programming.
Purchases of satellite transmission and
receiving equipment, and miscellaneous
office equipment, such as computers,
software and peripheral equipment, are
also included in this category. DirecTV’s
construction of two new satellites increased
purchase costs in 2013. Purchases as a
whole have increased as the cost of
programming has risen, particularly the
cost of sports programming. This trend is
expected to continue over the next five
Sector vs. Industry Costs
Average Costs of
all Industries in
sector (2015)
Industry Costs
(2015)
100
16.5
18.2
5.5
80
21.2
Percentage of revenue
Cost Structure
Benchmarks
continued
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
36.5
60
24.1
40
4.5
20
7.6
4.8
21.3
3.9
7.8
4.9
23.2
0
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
22
Competitive Landscape
Cost Structure
Benchmarks
continued
years, further pressuring providers’
profitability as they struggle to pass higher
purchase costs on to consumers amid
intense competition throughout the
broadcast distribution sector.
Marketing
Marketing, an expense that accounts for
about 3.9% of revenue, is a tool
companies use to reach out to audiences
and inform potential consumers about
their services. In recent years, satellite TV
providers have bundled services and
improved the quality of their offerings in
an effort to attract and retain customers.
They have also found it necessary to offer
products that can compete with online
video distributors and providers that are
aggressively penetrating the market. As
external competition intensifies in the
next five years, providers are expected to
invest even more heavily in marketing.
Additionally, the release of new products,
such as Dish’s Hopper set-top box,
increases marketing costs and eats into
companies’ profit.
Wages
Wages have been mostly stable over the
past five years and are expected to
account for 5.5% of revenue in 2015. A
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
High and the trend
is I ncreasing
The basis of competition in this industry
relates to the diversity, quality and
consistency of programming.
Programming caters to the needs of both
general subscribers and niche markets.
Federal Communications Commission
(FCC) regulations ensure that users have
a variety of choices for their TV services,
resulting in continued competition.
Internal competition
Satellite networks compete on a national
level. Internal competition is high
between DirecTV and Dish Network, as
these two companies offer a similar range
relative decline in wages is due to a lack
of investment in new satellites (until
2014), which has hampered the
industry’s investment in workers to
perform installation and setup tasks.
Instead, the industry hired more
customer service representatives to
improve consumer satisfaction. This
strategy has served to decrease the
industry’s average wage over the past five
years, because a greater portion of the
workforce is made up of lower-paid
customer service personnel.
Additional expenses
Additional industry costs include
depreciation, rent, utilities and
administrative costs. Rent and utilities
are relatively stable expenses and do not
change much as a percentage of revenue
in any given year. The costs of satellites
and transmission equipment, which
contribute to the industry’s significant
depreciation expenses, are cyclical,
spiking with new technologies and
decreasing as these technologies become
more mature. Other costs include
administrative and legal costs; these
costs are relatively static but spike during
periods of heightened merger and
acquisition activity.
of channels and services, which are
difficult for customers to distinguish. As a
result, internal competition is mostly
based on price and packaging. These
companies make services risk-free to
consumers to attract them, but
subscribers are locked into multiyear
contracts as a way of guaranteeing
returns after the initial promotional offer
or deal expires.
External competition
Cable TV is the biggest competition to
satellite TV providers due to the
similarity of the products and services
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
23
Competitive Landscape
Basis of Competition
continued
these industries offer. While cable
provides a more reliable connection,
satellite providers compete on the basis
of price and perks. They bundle more
services and offer a wider variety of
add-ons and channels to attract and
retain consumers. Also, a certain
percentage of US homes are not wired for
cable, which gives satellite providers a
clear advantage to service them.
Competing industries also include
telephone companies, online video
streamers, mobile video and local
broadcasters. Broadcast TV competes
against this industry; however,
competition from this medium is limited
due to its declining audience. Homevideo products and the internet are
intensifying competition as consumers
increasingly view programs over the
internet, through internet TV, on MP3
Barriers to Entry
The major barrier to entry to this industry
is the substantial initial capital investment
required to build, insure and launch a
satellite. Additionally, participants need to
invest considerable resources in satellite
communications equipment to transmit
broadcasts. Moreover, there are significant
costs associated with upgrading to and
using the latest technologies related to TV
programming and satellite uplinks. The
present illiquid environment has
increased the magnitude of these barriers
because it has become more difficult for
prospective players to gain funding for
such investment. The economic downturn
and its aftermath have exacerbated the
barriers to entry since 2008.
Astronomical start-up costs and the
relatively high fixed-cost nature of the
industry demand a solid customer base if
profit is to be achieved. This raises
another problem and barrier for new
entrants: the difficulty in establishing a
customer base, especially amid high
competition with cable TV providers and
Level & Trend
arriers to Entry
B
in this industry
are H
igh and
Decreasing
players, smartphones and games consoles
that are linked to the internet.
As mobile broadband connections
become more robust and ubiquitous,
broadband-enabled mobile devices that
stream content are emerging as the most
significant external competitor to this
industry after cable TV providers. Netflix
recently broadcast a content-original
show and Amazon and iTunes are
following closely. Google introduced its
new Chromecast, which allows users to
bring content from the web to their TV
screen. Indeed, these devices have greatly
increased the prevalence of cord cutters
(i.e. consumers that do not subscribe to
any pay-TV services and simply stream
content through the internet) over the
past five years. Competition from online
streamers is expected to intensify quickly
over the next five years.
Barriers to Entry checklist
Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
High
High
Growth
High
High
Heavy
None
SOURCE: WWW.IBISWORLD.COM
broadband-enabled mobile devices.
Satellite-based services are often offered
through service contracts that limit
accessibility to key industry subscribers
for start-up companies
The industry is also highly regulated
by the FCC; therefore, another barrier to
entry faced by prospective industry
entrants is the need to hold various
licenses or authorizations. Uncertain
waiting periods and complex laws
increase the likelihood of a business
being refused mandatory licenses.
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
24
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in this
industry is L ow and
the trend is S
teady
Satellite communication is a global
activity capable of covering large areas
of customers. Satellite infrastructure is
global in nature, and this technology
can be used and shared by multiple
companies spanning vastly different
industries in regions throughout the
world. Despite this global reach, the
Satellite TV Providers industry and its
largest companies are domestically
owned and generate a negligible
amount of their business abroad. For
instance, DirecTV generates about
21.0% of its revenue from foreign
markets. In addition, foreign satellite
TV providers have been slow to enter
the US market due to high competition
and regulation.
Satellite TV Providers in the US December 2015   25
WWW.IBISWORLD.COM
Major Companies
DirecTV Inc. | Dish Network LLC | Other Companies
Major players
Dish Network LLC 29.4%
(Market share)
17.3%
Other
DirecTV Inc. 53.3%
Player Performance
DirecTV Inc.
Market share: 53.3%
DirecTV began broadcasting in 1994 and
is engaged in acquiring, promoting, selling
and distributing digital entertainment
programming via satellite to residential
and commercial subscribers. The
company, which was originally part of the
late Howard Hughes’ empire, was spun off
as DirecTV in late 2006. The company
segments its operations into DirecTV US,
which encompasses its US satellite digital
TV services; DirecTV Latin America,
which provides digital TV services
throughout Latin America; and DirecTV
sports networks, which compose the
company’s three regional sports TV
networks. The industry-relevant DirecTV
US operating segment makes up 78.8
percent of company revenue; this
percentage has decreased over the past
five years as the company’s business in
Latin America has grown. In 2014,
industry-relevant revenue is expected to
total $28.1 billion, and profit is expected
SOURCE: WWW.IBISWORLD.COM
to total 17.5%, mainly due to price
increases, higher penetration of advanced
services and less discounting.
DirecTV has a fleet of satellites from
which it broadcasts to consumers. It
launched two new satellites D14 and
D15, to provide additional HD,
replacement and backup capacity. The
company gathers its programming
content in two broadcast centers and an
additional six uplink facilities
throughout the United States, enabling
it to send redundant transmissions to
satellites to avoid service interruptions
to its customers. The company has 20.4
million subscribers in the United States
and provides upward of 10,000 movies
and TV programs and more than 185
HD channels.
The company’s relationship with the
NFL and some collegiate sports
franchises has been beneficial to its
financial performance. DirecTV has been
DirecTV Inc. (DirecTV US segment) – financial performance
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2010
20,268
8.6
5,216
11.3
2011
21,872
7.9
5,289
1.4
2012
23,235
6.2
4,153
-21.5
2013
24,676
6.2
4,444
7.0
2014
26,001
5.4
4,749
6.9
2015*
28,128
8.2
4,936
3.9
*Estimates
SOURCE: ANNUAL REPORT
Satellite TV Providers in the US December 2015   26
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Player Performance
Dish Network LLC
Market share: 29.4%
able to leverage these networks to gain
subscribers through popular
promotions, such as the NFL Sunday
Ticket, which offers DirecTV’s
subscribers the largest selection of
Sunday football throughout the season.
In addition to providing an abundance
of channels beyond cable and local
content, DirecTV uses new technology to
provide value-added services to
consumers. For example, in 2013, the
company introduced DirecTV Genie, a
premium HD whole home DVR service
with a terabyte hard drive that allows
consumers to record five different HD
programs simultaneously while viewing
and controlling content from one DVR
to four other locations. Expanded sports
features have been one of the company’s
main avenues of growth over the past
five years. Additionally, the company
introduced DirecTV Genie in 2012, a
premium whole-home HD DVR that
provides customers with HD DVR in all
rooms without separate receivers and
allows them to record up to five shows at
the same time. In line with its goal to
increase revenue from advertising,
DirecTV invested in video advertisement
company FreeWheel in 2013. The
program allows the insertion of ads into
TV series offered through DirecTV
Everywhere, an app that streams live TV
on portable devices.
In July 2015, AT&T completed its
acquisition of DirecTV in a deal valued at
$48.5 billion. The deal is expected to
significantly expand the company’s
service offerings to compete with internet
service providers, cable TV providers and
mobile phone carriers. AT&T is likely to
become the largest pay TV provider in the
US as a result of the deal.
Dish Network (Dish) launched in 1996 as
a service of EchoStar Corporation. In
2008, the company split into two
separate entities, with Dish Network
operating as a satellite TV provider and
EchoStar holding the digital set-top
boxes, uplink and satellite transmission
assets, real estate and other related
liabilities. After splitting assets in 2008,
Dish Network and EchoStar commenced
operating as two separate public
companies, with neither having any
ownership interest in the other. Dish
Network operates two primary business
segments: Dish, which includes the
company’s Dish branded direct broadcast
satellite (DBS) pay-TV service, and
wireless, consisting of wireless spectrum
Financial performance
Over the five years to 2015, revenue from
DirecTV’s US operations is expected to
grow at an annualized rate of 6.8% to
$28.1 billion. Premium content, price
increases and less discounting, advanced
services, growth in commercial and
advertising sales and a solid reputation
for reliable services have brought in new
customers and, in turn, driving revenue
growth for the company’s US segment.
Increasing average monthly rates from
subscribers have also spurred revenue
growth. Profit growth was exceptionally
strong in 2010, due to the company
completing amortization of intangible
assets. DirecTV has stated that its US
operations will focus on generating a
greater share of revenue from
commercial and local advertising, as well
as managing rising programming costs.
The company will face increasing
competition over the next five years as
broadband internet penetration improves
and more content is streamed online and
to mobile devices, such as tablets and
smartphones. The AT&T deal will likely
enable greater revenue generation
through new bundled internet, mobile
phone and satellite TV packages.
Satellite TV Providers in the US December 2015   27
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
licenses and wireless assets that Dish has
acquired over the past five years.
Dish has been responding aggressively
to the new threats from online streaming
companies. Attempting to reach the
millennial population, the company is
offering Dish Anywhere, a mobile app that
allows customers to watch TV anywhere
and share their viewing experiences on
social networks. In July 2013, Dish and
Southwest began offering TV service to
customers through their own personal
devices. Dish briefly sought to buy number
three US mobile provider Sprint. Although
no formal deal was made, the company is
still looking to enter into the wireless
space to increase the company’s economy
of scope and drive demand for its core
satellite TV service.
In 2015, Dish’s pay-TV service had
14.0 million subscribers in the United
States. The company’s maintain
relevance in the era of cord-cutting is due
largely to its heavy promotion of the
Hopper set-top box, which can record up
to six HD channels at once, store up to
2,000 hours of programming and skip
commercials with PrimeTime Anytime.
Shortly after its launch, Dish was under
attack from Fox and other broadcasters,
concerned about a reduction in revenue
coming from advertisers who fear
subscribers will fast-forward past their
commercials, for a violation of copyright
laws. In July 2013, however, a federal
court decision supported the new
technology, allowing consumers to skip
commercials. The company also started
marketing its new dishNET broadband
service, targeting mostly rural residents,
as well as wireline voice, primarily
bundling the services with the Dish
branded pay-TV service. In 2014, the
company signed an accord with the Walt
Disney Company, effectively ending part
of the ad-skipping controversy, as Dish
agreed to disable its AutoHop adskipping function for ABC, which Disney
owns, for three days after programs are
initially shown. The agreement also
allows Dish to offer its newly attained
programming over the web along with
live and on-demand viewing of TV
programming on mobile devices.
Financial performance
Over the five years to 2015, industry
relevant revenue is expected to increase
by an annualized 4.2% to $15.5 billion.
The company has generated higher
revenue per user than ever before,
although both consumer churn rate and
new subscriptions have wavered amid
heightened competition from other TV
services. These factors, in turn, have
increased the cost of acquiring
Dish Network (Dish segment) – financial performance
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2010
12,640.7
8.4
1,940.8
39.9
2011
13,073.6
3.4
2,928.6
50.9
2012
13,064.9
-0.1
1,258.4
-57.0
2013
13,764.8
5.4
1,348.2
7.1
2014
14,495.1
5.3
1,824.5
35.3
2015
15,506.8
7.0
1,875.3
2.8
*Estimates
SOURCE: ANNUAL REPORT
Satellite TV Providers in the US December 2015   28
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
subscribers considerably. Profit took a
hit in 2012 when the company’s
litigation expense increased to $730.0
million. The company reported that it
had added a miniscule 1,000 net
subscribers for its pay-TV service over
2013 and estimated that gross new
pay-TV subscriber activations had
been negatively impact in the early
months of 2014 as a result of increasing
legal battles and subsequent
programming interruptions.
Other Companies
The Satellite TV Providers industry is
highly concentrated, with the two largest
players controlling an estimated 82.7%
of the market. The remaining portion of
the market is primarily divided between
small, localized multipoint distributionsystem operators and small satellite TV
provider Home2Us Communications
Inc. Home2Us is a direct-to-home
satellite broadcaster headquartered in
Herndon, VA. The company provides
broadcast uplinks, mostly to foreign TV
channels, to appeal to niche ethnic
groups. By providing language-specific
channels, Home2Us sets itself apart
from other satellite TV providers rather
than directly competing with them. Its
audiences subscribe via a pay-TV model
similar to that of the major players.
IBISWorld estimates that the company
maintains minimal market share in the
United States.
Satellite TV Providers in the US December 2015   29
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is H
igh
The Satellite TV Providers industry
exhibits a very high level of capital
intensity. Using wages as a proxy for
labor and depreciation as a proxy for
capital, IBISWorld estimates that for
every dollar spent on wages in the
industry, $1.42 is spent on capital. This
industry relies on satellites to transmit
TV programming to its consumers,
though this industry does not directly
operate satellites. Satellites are
extremely expensive to build, launch
and maintain; on average, direct
broadcast satellites cost about $175.0
million and have a useful life of 10 to 15
years. Other advanced technologies that
this industry invests in include satellite
dishes, uplink facilities and
programming centers. These expensive
Capital intensity
Capital units per labor unit
2.0
1.6
1.2
0.8
0.4
0.0
Economy
Information
Satellite TV
Providers
Dotted line shows a high level of capital intensity
SOURCE: WWW.IBISWORLD.COM
technologies make up the majority of
this industry’s capital investments.
While the industry’s skilled technical
Tools of the Trade: Growth Strategies for Success
Investment Economy
Recreation, Personal Services,
Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Communication
Equipment
Manufacturing
Traditional Service Economy
Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Capital Intensive
Labor Intensive
New Age Economy
Satellite TV Providers
Movie & Video Production
Cable Networks
Television Broadcasting Old Economy
Radio
Broadcasting
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
Change in Share of the Economy
SOURCE: WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015   30
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity
continued
labor force leads to a high average
wage, the number of people needed to
service satellite TV technology is
relatively low. For example, the largest
Technology & Systems The industry has experienced high
Level
The level
of
Technology
Change is H
igh
Revenue Volatility
Level
The level
of
Volatility is L ow
company in the industry, DirecTV,
employs about 16,500 people full-time
in its US services division to serve
about 20.4 million subscribers.
technological change in recent years.
Recent changes in digital broadcasting by
distributors have affected studio and
equipment upgrades, operations and
purchases. Many operators now use
digital networks following a large
investment in this infrastructure to roll
out high-speed data services, video-ondemand services, mobile and pay-TV
(subscription based TV services), and
other services. Also, encryption systems
are constantly redeveloped and enhanced
to continually minimize broadcast
security issues such as signal theft.
Satellite dishes have become smaller
while still transmitting a clearer signal,
reducing their adverse visual impact on
home exteriors.
High-definition TV (HDTV) is a
digital TV format delivering theaterquality pictures and sound. HDTV offers
an increase in picture quality by
providing up to 1,920 active horizontal
pixels by 1,080 active scanning lines,
representing an image resolution of
more than two million pixels. In
addition to providing video with more
visible detail, HDTV offers a wide-screen
format and Dolby Digital 5.1 surround
sound. Satellite TV providers have been
at the forefront of providing HD
programming (along with Cable
Networks), and began delivering HD
services to customers in 2002.
Deployment has been on an upward arc
ever since. The industry is also working
closely with TV set manufacturers to
ensure that consumers receive HD in the
most convenient and user-friendly ways
possible. As disposable incomes recover,
new technologies like 3-D TV are
anticipated to be adopted at a faster rate
by consumers and providers will
therefore invest more to provide more
programming in such formats.
The industry exhibits a low level of
revenue volatility. Measured as the
average absolute change in revenue per
year, Satellite TV Providers have
experienced an estimated 2.3% revenue
volatility over the five years to 2015.
Multiyear subscription contracts to the
major satellite TV providers’ services
reduce this industry’s volatility by locking
in consumer spending for several years at
a time. Additionally, service add-ons,
pricing comparable to that of cable and
improving video and sound quality have
attracted new customers and provided
operators with stable revenue growth.
Generally, industry revenue is affected by
changes and trends in interest rates and
the housing market. Over the next five
years, external competition is expected to
increase as mobile devices such as
Satellite TV Providers in the US December 2015   31
WWW.IBISWORLD.COM
Operating Conditions
smartphones and tablets become an
increasingly viable means of
distributing video content to consumers.
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Companies may need to lower prices or
spend more to add more services to
retain subscribers.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
continued
Hazardous
Rollercoaster
100
10
Satellite TV Providers
1
0.1
Stagnant
–30
–10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)
* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM
Regulation & Policy
Level & Trend
he level of
T
Regulation is
Heavy and the
trend is S
teady
Congress passed the Satellite Home
Viewer Improvement Act in 1999. Since
then, satellite TV companies have offered
local programming to many areas
throughout the United States. For areas
where local TV signals are not being
offered via satellite, satellite systems offer
built-in electronic A/B switches, which
enable satellite TV subscribers to access
off-air or cable TV signals.
While the Federal Communications
Commission (FCC) generally issues direct
to home (DTH) space station licenses for
a 15-year term, direct broadcast satellite
(DBS) space station and earth station
licenses are generally issued for a 10-year
term, which is less than the useful life of
a healthy DBS. Upon expiration of the
initial license term, the FCC has the
option to renew a satellite operator’s
license or authorize an operator to
operate for a period of time on special
temporary authority, or decline to renew
the license. If the FCC declines to renew
the operator’s license, the operator is
required to cease operations and the
frequencies it was previously authorized
to use would revert to the FCC. Operators
in the industry must apply for
permissions to launch and operate future
satellites to support their services. These
licenses take a significant amount of time
to acquire.
The Cable Television Consumer
Protection and Competition Act of 1992
requires the FCC to impose “public
interest or other requirements for
providing video programming” for
satellite TV providers. In 1998, a
congressional commission chose four
percent as the minimum amount of
nonprofit or educational programming
that satellite TV providers must offer to
subscribers. Satellite providers are
subject to disclosure requirements. They
must maintain a file containing
measurements of channel capacity,
yearly average calculations used to
determine the four percent set aside and
a record of noncommercial
programmers requesting and obtaining
access to capacity.
Satellite TV Providers in the US December 2015   32
WWW.IBISWORLD.COM
Operating Conditions
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is N
one and the
trend is S
teady
The industry does not receive any direct
or special federal government assistance.
Some states and municipalities do
provide tax and monetary incentives for
TV production in their jurisdiction;
however, such assistance is usually more
applicable to the Television Production
industry (IBISWorld report 51211b).
The Telecommunications Industry
Association is the leading trade
association representing the global
information and communications
technology industry in the United
States. It supports the industry through
standards development, policy
initiatives, business opportunities,
market intelligence and networking
events. The association counts
hundreds of companies among its
membership, enhancing the business
environment for companies involved in
broadband, mobile wireless,
information technology, cable, satellite,
unified communications and emergency
communications. Similarly, the Satellite
Broadcasting and Communications
Association represents all segments of
the consumer satellite industry and
provides skills assessment and training
programs to industry participants.
WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015  
33
Key Statistics
Industry Data
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Revenue
($m)
29,511.4
31,183.8
33,412.6
34,901.2
37,416.5
39,698.3
43,796.0
48,364.3
50,669.0
52,802.7
55,230.1
57,432.0
59,602.3
61,887.5
64,192.7
9/38
191/1373
Annual Change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Revenue
(%)
5.7
7.1
4.5
7.2
6.1
10.3
10.4
4.8
4.2
4.6
4.0
3.8
3.8
3.7
15/38
367/1373
Industry
Value Added
($m)
10,356.8
9,962.6
10,742.5
12,352.2
13,195.7
13,925.9
11,060.2
11,864.0
14,743.2
16,589.1
16,420.8
17,384.9
16,689.0
17,819.9
18,617.5
13/38
180/1373
Establishments
117
125
90
94
101
108
108
115
118
120
122
125
127
130
133
38/38
1201/1373
Enterprises Employment
26
20,988
28
22,290
20
21,927
21
22,797
22
24,424
23
27,480
23
27,217
24
27,700
25
28,915
25
30,088
26
31,373
26
32,538
27
33,746
27
35,007
28
36,287
38/38
24/38
1332/1373
714/1373
Exports
—————N/A
N/A
Industry
Value Added
(%)
-3.8
7.8
15.0
6.8
5.5
-20.6
7.3
24.3
12.5
-1.0
5.9
-4.0
6.8
4.5
1/38
64/1373
Establishments
(%)
6.8
-28.0
4.4
7.4
6.9
0.0
6.5
2.6
1.7
1.7
2.5
1.6
2.4
2.3
17/38
590/1373
Enterprises Employment
(%)
(%)
7.7
6.2
-28.6
-1.6
5.0
4.0
4.8
7.1
4.5
12.5
0.0
-1.0
4.3
1.8
4.2
4.4
0.0
4.1
4.0
4.3
0.0
3.7
3.8
3.7
0.0
3.7
3.7
3.7
22/38
13/38
909/1373
253/1373
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
IVA/Revenue
(%)
35.09
31.95
32.15
35.39
35.27
35.08
25.25
24.53
29.10
31.42
29.73
30.27
28.00
28.79
29.00
29/38
696/1373
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are in inflation-adjusted 2015 dollars. Rank refers to 2015 data.
Revenue per
Employee
($’000)
1,406.11
1,399.00
1,523.81
1,530.96
1,531.96
1,444.63
1,609.14
1,746.00
1,752.34
1,754.94
1,760.43
1,765.07
1,766.20
1,767.86
1,769.03
1/38
41/1373
Imports
—————N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages/Revenue
(%)
7.16
6.92
6.19
5.93
5.73
5.76
5.66
5.43
5.44
5.46
5.47
5.48
5.50
5.51
5.53
38/38
1270/1373
Wages
($m)
2,112.3
2,156.9
2,068.9
2,070.9
2,144.6
2,285.8
2,476.7
2,628.0
2,757.8
2,882.1
3,020.4
3,146.2
3,275.3
3,410.9
3,548.8
24/38
487/1373
Wages
(%)
2.1
-4.1
0.1
3.6
6.6
8.4
6.1
4.9
4.5
4.8
4.2
4.1
4.1
4.0
14/38
262/1373
Employees
per Est.
179.38
178.32
243.63
242.52
241.82
254.44
252.01
240.87
245.04
250.73
257.16
260.30
265.72
269.28
272.83
1/38
24/1373
Number of Cable
Domestic TV Subscriptions
Demand
(Mils)
N/A
98.0
N/A
102.0
N/A
104.1
N/A
104.7
N/A
104.5
N/A
104.0
N/A
103.2
N/A
100.3
N/A
100.2
N/A
99.3
N/A
98.3
N/A
97.2
N/A
96.4
N/A
95.6
N/A
94.7
N/A
N/A
N/A
N/A
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Average Wage
($)
100,643.22
96,765.37
94,353.99
90,840.90
87,807.08
83,180.49
90,998.27
94,873.65
95,376.10
95,789.02
96,273.87
96,693.10
97,057.43
97,434.80
97,798.11
16/38
102/1373
Number of Cable
TV Subscriptions
(%)
4.1
2.1
0.6
-0.2
-0.5
-0.8
-2.8
-0.1
-0.9
-1.0
-1.1
-0.8
-0.8
-0.9
N/A
N/A
Share of the
Economy
(%)
0.07
0.07
0.07
0.09
0.09
0.09
0.07
0.08
0.09
0.10
0.10
0.10
0.09
0.10
0.10
13/38
180/1373
SOURCE: WWW.IBISWORLD.COM
Satellite TV Providers in the US December 2015   34
WWW.IBISWORLD.COM
Jargon & Glossary
Industry Jargon
CHURN RATE The percentage of subscribers to a service
that discontinue their subscription in a given time
period.
DIGITAL VIDEO RECORDER (DVR) A device that
records video in digital format to a disk drive and allows
consumers to pause and rewind programs as they watch
them.
MILLENNIALS Also known as Generation Y, the term
refers to the generation born between 1980 and 2000,
and brought up surrounded by technology and mass
media.
PROGRAMMING The programs and series networks
develop that this industry delivers to subscribers.
DIRECT BROADCAST SATELLITE (DBS) A satellite that
broadcasts directly to a home satellite receiver.
FEDERAL COMMUNICATIONS COMMISSION (FCC)
An independent US agency that regulates radio and TV
communications.
IBISWorld Glossary
BARRIERS TO ENTRY High barriers to entry mean that
new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITY Compares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICES The dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
“real” growth or decline in industry metrics. The inflation
adjustments in IBISWorld’s reports are made using the
US Bureau of Economic Analysis’ implicit GDP price
deflator.
DOMESTIC DEMAND Spending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise
consists of one or more establishments that are under
common ownership or control.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTS Total value of industry goods and services sold
by US companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in the
United States.
INDUSTRY CONCENTRATION An indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players account
for more than 70% of industry revenue. Medium is 40% to
70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industry’s contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth,
maturity and decline. IBISWorld determines an
industry’s life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industry’s products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
Satellite TV Providers in the US December 2015   35
WWW.IBISWORLD.COM
Jargon & Glossary
IBISWorld Glossary
continued
PROFIT IBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
VOLATILITY The level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.
WAGES The gross total wages and salaries of all
employees in the industry. The cost of benefits is also
included in this figure.
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This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use
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