Tele-TV said:
Of course, always apprciate your help Longhorn.
Guys, why would D* require a 2-year agreement even if you purchase the MPEG-4 HD-DVR? Thankfully I'm looking to get the HMC. Thanks.
When you pay full price for the box upfront do you ever consider that your not paying full price. Any box you buy from DirecTV is discounted even when you purchase it upfront which is why you must agree to any total choice package for two years. Without this agreement the boxes would cost you between 500-750 bucks at the least. Your getting at least 200 bucks off their cost for these boxe s with that two year agreement. For those of you who buy three HD DVR boxes for example at 300 bucks are getting a great deal because your "two" year agreement must cover DirecTVs costs for not one box but for three. Its part of doing business and they feel its best to offer customers more than one box and hope they stay than to limit what customers can get because that would most likely drive that customer to cable who can offer the customer those extra boxes with no upfront costs.
This is all a balance and its not easy that is for sure. Just remember just because your paying for it upfront doesn't mean your paying the full cost. DirecTV did some heavy research and felt it was best to make all advanced products require a two year agreement so they can greatly lower the upfront prices of these boxes to better compete. They felt the drawback of this system was less than the future gains of this system which is getting another subgroup of customers from the lower prices. This system would also work the same as they will give customers with good credit the option of renting to own the hardware. So they plan to get the price down to about 300 bucks if your payed for it upfront without renting it. So if they rent the box for say 10 bucks a month that would total itself up over that two year period to 240 bucks of that 300 bucks. They are banking that as volume increases their costs would drop to around 250 bucks a box. So it breaks down like this below.
They have a level of profit they make every month from even a total choice customer. That profit over the two year period must get very close to covering what they paid out to get you as a customer and to cover the hardware they either provided for you or subsidized for you.
I don't know what the figures are for this but rest assured that they have worked the numbers like crazy. Now customers who order products that provide them with further profits are much more likely to get extra discounts of higher end hardware as they can make up this cost quite a bit quicker.
I know everything I said above isn't pretty and again I don't have the exact numbers but I'm just giving you an overview of how things work. This should give you enough of an overview to fill everything else in for yourselves.