Last week DirectTV announced they were dropping the price for their NFL Sunday Ticket pacakge to $199. Previously priced at around $325, DirectTV has shrewdly dropped the price although they've segregated some features away from the $199 package that will cause many people to shell out $299. The extra $100 will get you the ability to stream to mobile devices, the GameMix (8 games crammed onto 1 TV!), highlights On-Demand, and the wildly popular Red Zone Channel.
So why would it be smart to drop the price considering DirectTV has exclusivity for the package?
The first thing is that a year ago, DirectTV offered the package for free for people who signed for DirectTV leading up to the season. This promotion added a very hefty 300,000 subscribers.
So right there you have presumably a six figure audience who joined and didn't have to pay for this service. Dropping the price from $325 to $199 will probably allow a lot of those folks to now pay for the service, which is a luxury that I put on par with air conditioning, high speed internet, and high definition (basically I can never go back once I've had them).
The other thing is that out of the 2-3 million households that have the package, I'd imagine most will go the route for the higher priced package as the Red Zone channel is football in its most potent form other than being in attendance at an actual game. It's for the addict who wants to see everything and is totally superior to flipping around during commercials trying to catch a glimpse of something interesting. The other features have some value (especially mobile device streaming) but a lot of it is just window dressing to inflate the value of that higher end package.
All in all, DirectTV may make more money by getting more people to pay and not get comped the package this year. The price drop also helps them decrease the value of what they comp to customers like me. A year ago or so, I posted how every year I go through this charade of calling DirectTV feigning that I will leave before they offer me a package of stuff to stay.
Seriously, if you're paying full price for DirecTV and haven't been given a discount in over a year, read the link above as you're getting nailed to the wall. I'd never consider leaving, but the annual call yields the package for free and about $200-$300 of other discounts.
This year when I make the call if I get offered the package for free (the $199 no frills package) and another $250 of other discounts, my total amount saved by being a full of shit perfectly happy customer financially prudent customer will be $450 ($199+$250+$1 because rounding is awesome). The $100 upgrade for the Red Zone Channel is now coming out of my pocket and not bundled in with what I would be getting for free.
It's not hard to imagine that DirectTV is giving out the package to acquire and retain customers to potentially up to a 1/4th of 2-3 million households that get the package. If the value of what you're giving away for free goes down and more subscribers add the package, then it's very possible the price decrease actually helps the bottom line regardless of the value assigned to new subscribers, which the package is really aimed to harvest.
In a nutshell, the fall can't come soon enough.