Is DIRECTV Readying a Major Streaming Offer?

Trademark applications give renewed interest in the previously alluded to "over the top" streaming product from the world's biggest pay-TV provider.

Jan 18, 2014 at 7:30AM

It's no secret that for the pay-TV providers, innovate or perish is the name of the game. While the cable companies have rolled out Internet-based streaming options (otherwise known as "over the top" offerings) to compete with industry disruptors, satellite providers have yet to wade too deep into the game. This has left investors and analysts wondering what the holdup is, and if management is neglecting one of the few high-growth highways still open in the pay-TV landscape. One of these satellite companies, and the biggest pay-TV business in the world, DIRECTV (NASDAQ:DTV), has hinted at plans but shown little. Now, with evidence surfacing in the form of intellectual property, we may be close to what could be DIRECTV's most important product development in a decade.

Internet
As reported by trade blog FierceCable, DIRECTV recently filed two trademark applications involving the name "WV Wild & Wonderful Sports." While this is clearly in reference to a regional sporting offer ("Wild and Wonderful" being the state slogan of West Virginia), it is the first piece of concrete evidence that CEO Mike White and his team are getting closer to launching an "over the top" video product.

Over the top could mean nearly anything at this point, but investors have some idea of what DIRECTV is looking to deliver. DIRECTV was one of the most competitive bids last year when Hulu was briefly for sale. Management has since made clear that it will not release a product that is on the scale of Hulu or Netflix, but instead a more targeted, tech-friendly product. Compared to the rather clunky systems in place with Comcast's Xfinity service, this could be an industry-leading development.

Positioning
The cable companies are bleeding video subscribers and relying more and more on broadband users. That's holding things together, for now, but the writing is on the wall here -- find a way to fight back against both streaming competitors and content owners, or get swallowed up.

DIRECTV has not been losing customers, and is actually gaining them in both the highly mature North American market and the high-growth Latin American market (where it is by far the market share leader). In an odd twist, the most traditional of pay-TV providers has been the most adept at avoiding the "unplugging" phenomenon.

Still, White is aware of what will happen to this industry, and he realizes his company cannot rest on its laurels of being the dominant pay-TV provider. DIRECTV needs an equally massive streaming offering. Regional sports, an area not yet infiltrated by the Silicon Valley disruptors, is a great way to start this off.

If DIRECTV's product can deliver something that no other major company yet has, it could be in position to remain the best in its industry.

More from The Motley Fool 
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends DIRECTV and Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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