Dish prioritizing New over Existing Customers?

Tom Bombadil

Supporting Founder
Original poster
Supporting Founder
May 5, 2005
3,601
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Chicago-Milwaukee Region
We know there will not be an adequate supply of MPEG4 receivers for the next few months. However we don't know just how limited the supply is.

Do you think that the decision to limit existing customers on their number of upgrades is due to solely to the lack of MPEG4 receivers?

Or do you think E* is rationing them out, limiting the existing customer upgradess in order to have enough to sell to new HD LIL markets? I.e., is the upgrade channel getting squeezed because E* places a higher value on meeting the needs of new customers than their existing customers?

I suspect the latter is true. That E* could upgrade many more existing customers if that were a priority. But in order to conserve receivers for new customers, they have decided to allow existing customers to get only one new receiver, enabling them to watch the new channels on their primary HDTV, but would rather sell to a new customer than give the existing customer the option of getting the new channels on a 2nd or 3rd HDTV.

I'm not saying that this is the wrong business model. E* does need to grow their customer base and they would like to more aggressively market HD to the large cities where they are going to offer HD LILs. Otherwise D* will be mining those markets while E* can't supply the equipment. But it is frustrating.
 
My best guess is the limit is because the receivers are worth a lot and dish doesn't want to be leasing more than 1 to each customer
 
Since Dish's plan is to lease all of the MPEG4 receivers, it wouldn't make much difference who is leasing them. Some will argue that Dish makes more on a lease than a sale. So I don't think the leasing issue is the reason.
 
Everyone,

IMHO, I don't understand why everyone is sooooo upset about this deal, for one thing, be happy Dish is now the leader in HD, they've only been saying it for what, 3 years, it is about time they lived up to it. For another, just the fact that we are looking to the next generation of technology, should be enough to keep us happy, at least Dish didn't say "it will be another 2 years before we can add more HD."


Dish I am sorry does not make more on a lease. For starters, even at $299 upfront for the 622, plus $6 a month, and if the customer keeps the unit for 2 years and the price of leasing does not go up or down, Dish will receive $343, for a receiver that retails at $700. Let us assume you kept the receiver for more than 2 years, say, 4 years, Dish will only receive $587 out of a receiver that retailed for $700. What is the life of receivers (how long before something newer is needed?) based on history, approx. 4 years, so before Dish even gets the retail value out of a receiver, they will have to give that lease customer another $300, $400, $500,... receiver. Dish would make more money off those customers that buy, I mean, how much money did they make from people who just had to have a 942 for instance? Then when you consider that the 921 is only what 2 1/2 years old, and originally went for $999, and you start to see that Dish makes much more money on those customers that buy.


Just because they only give you 1 receiver on a lease, does not mean they value current customers less than new ones, perhaps, they simply don't want $1,400.00 worth of equipment sitting in someone’s house for only $598 (for two of the 622's for instance--I know that the 211/411 don't cost that much). Would you? Besides, the argument that this means new customers are a priority over existing customers is bunk. If Dish has 12 million subscribers, and let us say, 10% (I would say that is about right, but I am only guessing here, someone else that knows, you are welcome to correct) are HD customers. Then that means 1.2 million Dish customers will be needing a MPEG4 upgrade, not counting new customers, if Dish allows all those 1.2 million to pick up just 2 of those NEW MPEG4 boxes at a cheap $299 (or less for 211)--less than half the retail. That means Dish would have to have 2.4 million boxes ready to go for just existing customers. That, I am sorry is a large number, and if you add to that possible new customers. Based on last years numbers, Dish added 1 million subs, if 10% holds, that means 100,000 new customers would be HD customers (which I’d think would be a low number, considering Dish has added so much HD) for a total of at least 2.5 million--count that on your fingers and toes--new HD boxes. In addition, even if, Dish added 1 million HD only customers, which number is higher? 1.4 million or 1.0 million? So I am sorry the argument that this means new customers are some how getting all of Dish's attention is bunk.


Of course, you can still buy the new MPEG4 receivers, which Dish is more or less using so that they do not sell out of new boxes when they just fill the order of HARD-CORE HD fans—, which likely is only about 10% of all HD customers—they make you buy them past the first one. I personally feel that this is very fair, and really am tired of all the hoop-la about Dish’s upgrade plan, and how Dish is such a evil empire.
 
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If Dish lost money on leasing, then they would not make this their acquistion method of choice, which it clearly is as they are pushing everyone toward it.

Remember at the end of a lease, Dish gets the equipment back. And if someone terminates a lease after their commitment period, Dish can re-lease it with the full lease fee again.

And they don't lose the dealer mark-up portion of the $699 price.

They also get some tax breaks from leasing, being able to depreciate equipment costs over multiple years.

All of Dish's actions toward almost forcing customers to go the lease route suggests to me that Dish makes more money over the long haul from leasing than from selling outright. Look at the 622, there seems to be no incentive, and very few channels, to purchase one. If selling were the real money maker, you would see Dish pushing, not hiding, this option.
 
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Could the lease model be an effective deterrent for pirating? If you lease the receiver and make mods to it, it might be noticed when returned. This may keep "some" pirating down since some would be reluctant to try.

Also, leasing the receiver means the leasee returns the receiver. That would mean less support required for older receivers. I still have the 7100 and 5000 sitting around, and the 5000 is used in the kids' playroom (7100 isn't used anymore, but could easily be reconnected).

This lease model helps E* in many ways.

Just wish I could get a better deal for trading my 811 to a 622, which is exactly what a new sub can get it for. :(
 
During the meetings with stock holders SAC (Subscriber Acquisiton Costs) is always mentioned. This is the #1 reason for going with a lease program. E* no longer has to consider the equipment being sold to a new sub at a loss. Instead, they still own the equipment which tremendously reduces SAC and makes the share holders :).

In the end, if enough folks leave Dish over this, the bottom line won't pan out as Charlie expects. Unfortunately, not enough people will leave to even make a dent on the 12 million subs.
 
Dish must know if it wasn't for us they would be nobody....the exsiting subs is what makes dish......we are the ones who refer people to them and so on. They should care more about us
 
I don't think the $299 lease option for a 622, which is available for any existing receiver (811 or otherwise), is that bad of a deal. In the past, we frequently screamed to be able to get the same deal as a new sub. Now we can.
 
Maybe when the receiver was purchased, getting the 622 for the same as a new sub at $299 would be great! But forcing a lease for the same amount as a new sub is a slap in the face IMO.

Sure, I'll end up paying the $299 for the HD LiL because I can't get them OTA...and to tell you the truth I personally don't mind that cost. My problem is trying to convince my wife that this is OK! :eek:

Of course, she missed American Idol tonight, and I couldn't record the show on the VCR because...ahem...I couldn't find a blank tape. :devil:
 
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