[opendtv] Re: Barriers eroding to LCD TV adoption

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Wed, 4 Aug 2004 06:50:34 -0400

At 5:56 PM -0400 8/3/04, John Shutt wrote:
>Perhaps USDTV has changed their policy?  This is on their website:
>
>http://www.usdtv.com/get_usdtv-subscription_details.php
>
>"Terms and Conditions:
>A subscription to USDTV is required to receive any broadcast service with
>the USDTV receiver. By subscribing to the USDTV service, the customer agrees
>to a one-year service agreement of $19.95 per month for the base receiver
>and $4.95 per month for each additional receiver. The monthly service fee
>will be charged to the customer's credit card. If the customer terminates
>the agreement prior to the 12-month term, a cancellation fee of $199.00 per
>receiver will be charged. For complete Terms and Conditions review our
>Residential Customer Agreement."

You guys are mostly missing the bigger picture here.

The Hisense receivers are subsidized in TWO ways.

Hisense is selling the receivers to USDTV below cost. I have heard 
estimates that the cost of manufacture is about $200 - THIS IS NOT A 
RETAIL PRICE!

Hisense sells the receivers to USDTV for about $150 - THEY ARE 
SUBSIDIZING THE REST.

The customer pays $99 at WalMart when they buy EACH receiver. In 
order to use it they must then subscribe to the USDTV service. The 
fees listed above in the Terms and Conditions are in addition to the 
one time price paid for each receiver. The monthly fees cover several 
things:

1. Monthly subscription fees for the non broadcast channels that are 
paid directly to the networks that are carried;
2. Retransmission consent fees for the local broadcast signals - this 
may be the way that local broadcasters are compensated for the use of 
their spectrum.
3.  Repayment of the subsidies for the receiver.

If the Hisense box were sold at retail today it would cost at least 
$300 in order to cover manufacturing, distribution, sales and 
marketing costs.

Regards
Craig

And don't forget the royalties. About half of the $67 cost for a STB 
is royalties, which do not get cheaper with volume or Moore's Law 
driven cost reductions.
 
 
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