[opendtv] Re: Barriers eroding to LCD TV adoption

  • From: "Lee Wood" <LWood@xxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 4 Aug 2004 11:23:22 -0700

Check this... especially the last sentence.

<snip>

Strategic Partnership with Hisense=20

To create the set-top boxes that enable consumers to enjoy the company's
unique service, USDTV has entered into a strategic manufacturing and
financial partnership with China's Hisense Company, Ltd. The agreement
includes $60 million in financing to produce 400,000 of the company's
proprietary, ATSC compliant set-top boxes capable of tuning all digital
and high-definition formats. The companies are also developing
integrated USDTV Ready(TM) plasma and LCD televisions. Hisense is also a
minority investor in USDTV.=20

</snip>

http://home.businesswire.com/portal/site/moreover/index.jsp?epi-content=3D=

GENERIC&newsId=3D20040316005566&newsLang=3Den&beanID=3D1868105982&viewID=3D=
news_
view

> -----Original Message-----
> From: Bob Miller [mailto:bob@xxxxxxxxxx]=20
> Sent: Wednesday, August 4, 2004 5:40 AM
> To: opendtv@xxxxxxxxxxxxx
> Subject: [opendtv] Re: Barriers eroding to LCD TV adoption
>=20
>=20
> Craig Birkmaier wrote:
>=20
> >At 5:56 PM -0400 8/3/04, John Shutt wrote:
> > =20
> >
> >>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=20
> broadcast service=20
> >>with the USDTV receiver. By subscribing to the USDTV service, the=20
> >>customer agrees to a one-year service agreement of $19.95 per month=20
> >>for the base receiver and $4.95 per month for each additional=20
> >>receiver. The monthly service fee will be charged to the customer's=20
> >>credit card. If the customer terminates the agreement prior to the=20
> >>12-month term, a cancellation fee of $199.00 per receiver will be=20
> >>charged. For complete Terms and Conditions review our Residential=20
> >>Customer Agreement."
> >>   =20
> >>
> >
> >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=20
> >RETAIL PRICE!
> >
> >Hisense sells the receivers to USDTV for about $150 - THEY ARE
> >SUBSIDIZING THE REST.
> > =20
> >
> Hisense is not a partner with USDTV. They are selling the=20
> same receiver=20
> to WalMart for something on the order of $150 also. I cannot=20
> think of a=20
> reason they would take a loss of $50 unless it was made up somewhere=20
> else. How do you make up for $50 loss for every unit sold=20
> country wide?=20
> They are not selling many TV sets under their name. Do you know=20
> something I don't?
>=20
> >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=20
> >fees listed above in the Terms and Conditions are in addition to the=20
> >one time price paid for each receiver. The monthly fees=20
> cover several=20
> >things:
> > =20
> >
> Walmart charges $198.76 with only a reference to USDTV. If you call=20
> USDTV they only talk about a $19.95 per receiver one time=20
> charge. Why do=20
> they have a $199 cancellation fee PER RECEIVER if you=20
> terminate anytime=20
> in the 12 month contract period? This would not make any sense unless=20
> you are paying for each receiver. Otherwise the most that they could=20
> charge would be the remainder of your contract.
>=20
> That is if I have 4 receivers and cancel with one month to go=20
> I would be=20
> charged $800 for what would be a one month charge of under $40.
>=20
> Either their web site and their customer reps or their policy=20
> is wacko=20
> if what you say is true. Already know that their web site is=20
> difficult=20
> to understand.
>=20
> >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=20
> signals - this=20
> >may be the way that local broadcasters are compensated for=20
> the use of=20
> >their spectrum.
> > =20
> >
> What are they retransmitting? Wouldn't they just be facilitating the=20
> delivery via satellite to these broadcasters content they then want=20
> broadcast that is encrypted and found by subscribers as sub channels?=20
> Local broadcasters would either be partners or be paid cash IMO for=20
> their delivery of the content.
>=20
> >3.  Repayment of the subsidies for the receiver.
> > =20
> >
> USDTV buys the receivers from Hisense for $150 AFAIK just=20
> like WalMart=20
> does. The only subsidy is the one that USDTV gives to the=20
> customer and=20
> they have to recoup that out of the monthly fee yes. Does the=20
> customer=20
> pay $19.95 at WalMart for the receiver if they also sign for a=20
> subscription to USDTV or do they get a refund from USDTV later? Does=20
> WalMart stock two receivers in cities where USDTV is active, one=20
> modified by USDTV and one for just non USDTV free to air programs?
>=20
> >If the Hisense box were sold at retail today it would cost at least
> >$300 in order to cover manufacturing, distribution, sales and=20
> >marketing costs.
> > =20
> >
> They are sold at retail now for $198.76 with no chance for any=20
> recoupment of a loss. If they want to buy market share in the=20
> US with a=20
> $100 loss per receiver and no major marketing blitz for their=20
> brand this=20
> would be crazy. Yes Hisense wants to own this space. They=20
> claim to have=20
> their cost more under control than everyone else.
>=20
> >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=20
> >driven cost reductions.
> >
>=20
>=20
> =20
> =20
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