When it comes to TV, I believe that the turf wars between DirecTV (NYSE:DTV) and fellow satellite video provider EchoStar (NASDAQ:DISH) on the one hand, and cable providers such as Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and Cablevision (NYSE:CVC) on the other, will continue for years to come. As such, I welcomed the opportunity for a management update on DirecTV's status and direction at last week's Bear Stearns Media Conference.

Alas, what I'd hoped would be a formal presentation was more of an unstructured chat between a Bear Stearns moderator and DirecTV CEO Chase Carey. Still, the two did cover some interesting and important topics, providing insight into Carey's thoughts about his company, and about such related areas as DirecTV's heavy reliance on sports programming to attract subscribers, satellite's ability to provide robust video-on-demand, and its capacity to compete with cable's triple-play offerings.

Carey began with an interesting look back at DirecTV's early days as a brainchild of engineers at Hughes Aerospace, then a subsidiary of General Motors. As Carey noted:

"It was a company that really had a legacy that was grounded in engineering and technology. It didn't control its sales process. It didn't control the installation process. It didn't even know who the installers were."

Indeed, in its earliest days, the satellite provider had little or no control over which set-top boxes were used, the look and functionality of the guides used on them, or whether they were installed properly at the customer's premises.

The DirecTV of today has come a long way since, although Carey remains far from satisfied. "We still don't execute well -- as well as we need to," he said. "We've made strides forward, and competitively we stack up well, but we've got to do better than we've done, got to take it to another level."

Bundled up
Carey waxed optimistic regarding the all-important question of his company's ability to compete with cable's triple-play bundle. That's partly because DirecTV can partner with telecom firms in providing a truly competitive option. "Today, actually, we're very competitive with the bundle," he said. "If you look at the DSL numbers that telephone companies continue to put out, I think in the past couple of years they've taken slightly more than half the market, and we marry very well with them."

He continued with a list of important topics, always, it seemed, returning to the primacy of the video product in shaping consumers' preferences. After noting his feeling that the (cable) bundle is mostly about price, he said, "Within that mix of (bundled) services, television is the one consumers care the most deeply about. If you have a glitch on their television experience, they're on the phone screaming at you in five seconds. The PC can go down and people sort of learn to accept it."

Carey believes that the quality of DirecTV's video positively differentiates the company from its competition. "I'm not even sure there are many cable systems that are pure digital. They're mostly hybrid analog and digital, which has both quality and packaging issues. We clearly have a much cleaner, better-valued package," he said.

Carey obviously also believes that its amount of its high-definition programming also sets his company apart. He predicts that before the end of this year, DirecTV will offer 100 channels with HD capability, and "it's going to be 100 channels of the programming that people want to see."

He also believes that sports programming, while not the be-all and end-all for all viewers, is crucial to his company's competitiveness: "It is the most powerful programming out there. Whether it's the Sunday Ticket (of National Football League offerings), or the U.S. Open in tennis, where we covered six courts at a time, the NASCAR Hot Pass, where we cover six channels, with the traditional channel and individual coverage of five drivers...."

VOD or not VOD
I was pleased to hear Carey then deal with satellite's ability to compete with the video-on-demand offerings of the cable companies. I've long considered this area satellite's Achilles heel in its war with cable. The knock has always been that satellite, essentially because of its lack of an adequate "return path," will never be capable of offering more than a rudimentary approximation of cable's potentially robust VOD (video-on-demand) product.

Carey argues, however, that the increasing disk capacity of set-top digital video recorders will close the VOD gap with cable: "That disk is going to get bigger quickly, just like PC storage got bigger. So today, we have disks in the home that can store 200, 300 hours. They'll quickly go to 500 hours. They'll go to 1,000 hours."

In a sense, Carey next essentially echoed my own concern about VOD having failed to reach its potential because of the weak marketing effort it's been accorded by the cable operators. "I think customers have to grow into VOD. VOD is still a very small event for us competitively. I mean, there just aren't too many customers who understand it or can figure out how to use it," he said.

DirecTV, as many media observers are aware, has recently chosen to target quality growth, rather than simply attempting to sign on as many new subscribers as possible, many of whom likely wouldn't stick around. Because of this approach, I found it telling when Carey noted that, "The best way we could add subscribers is to reduce our churn. Keeping the customers we have is clearly the best return and the best way for us to crate value."

Finally, regarding the emergence of the telcos in offering their own video, data, and telephone products, Carey believes that Verizon (NYSE:VZ) may be trying to tackle more than it can afford to, between its costly plant build-out and its expensive programming acquisitions. He also believes that AT&T's (NYSE:T) "more technology-driven path," might prove too advanced for most consumers.

Foolish bottom line
In the end, Carey's essentially stream-of-consciousness conversation proved informative. Since I'm not convinced that any one form of technology will ever totally dominate consumers' preferences, I was pleased to be brought up to speed on DirecTV's approaches and initiatives. From the standpoint of Fools and their portfolios, I think it's worth noting that the company's shares have increased about 80% in value over that past year. As such, and given what seems to be real wisdom behind management's targeted approach to growth, I believe that Fools would do well to keep this company firmly in their sights.

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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.