Verizon announced an increase in overall channel line up, with emphasis on 25 new HD channels, which will be available this summer. With the expanded HD line-up, FiOS customers will soon be able to get somewhere between 52 and 65 HD channels, depending on their location. New HD channels will include Lifetime, Animal Planet, TLC, Science Channel, Smithsonian Channel, Starz, and Showtime. Verizon also reiterated their commitment to offer 150 HD channels by year end 2008. "The popularity of HD, sports and multicultural content continues to grow, and we're committed to leading the industry in the scope and quality of our programming offerings," said Terry Denson, vice president - FiOS TV content and programming.

In addition to the new HD line-up, Verizon will be adding a new sports channel, Setanta Sports, “… a premium channel dedicated to bringing European and International soccer and rugby to U.S.-based fans.” Verizon says they will be the first terrestial based video provider to make Setanta available, at least at the time of launch. In some regards, Verizon is playing catch up with HD. Its main competitors, Comcast, Time Warner Cable, Cablevison, and DirecTV are actively increasing their HD line-ups as well. It’s a little difficult to say who has the lead among traditional cable companies, because line-ups change depending on location. DirecTV, who by most accounts, has established itself as the overall HD leader. Verizon appears to be up to the challenge, and should their promise of 150 HD channels by the end of the year hold true, they will be more than capable of meeting HD competitive challenges.

DISH Networks reported disappointing results for the first quarter 2008 in a SEC filing. DISH indicated competition from cable and telecom carriers are main factors in their 89% decline in subscriber growth, which netted only 35K net subscribers. In the 10-Q filing DISH says, “We believe that this declining subscriber growth has been driven in part by competitive factors including the expansion of fiber-based pay TV providers, the effectiveness of certain competitors’ promotional offers, the number of markets in which competitors offer local HD channels, and their aggressive marketing of these differences.” This report offers a strikingly different result from DirecTV’s recent results which reported 275K net new subscribers, a 17% increase. DISH will officially report their quarterly results on Tuesday.

DISH appears to be falling victim to both telco and cable triple play success, and to DirecTV’s continued HD superiority. DirecTV is maximizing its HD lead over all competitors, and in DISH’s case, their advantage appears to be widening. Add telco and cable’s triple play competitive advantage, and DISH looks like it is in for a rough few quarters. They’ll have a difficult time reversing the trend, because their historical value play of low cost is vulnerable to the savings perception of the triple play bundle. Adding insult to injury, they have no trump card like DirecTV does with HD and high end sports programming. They even face a HD setback, whose timing couldn’t be worse, caused by a recent satellite launch mishap. It all adds up to an ugly situation from a DISH investor point of view. Their competitors are salivating at the prospects of luring DISH’s 13.8 million subscribers.

Verizon announced the launch of HD VOD for its FiOS customers in Oregon. Oregon joins other HD VOD markets, including California, Delaware, Florida, Indiana, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Texas and Virginia. Verizon says they plan to offer 1,000 HD VOD titles monthly by the end of the year.

Verizon announced the expansion of high definition VOD service to eight additional states. With the expansion, Verizon’s HD VOD service is now available in California, Delaware, Florida, Indiana, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Texas and Virginia. Verizon says they will average about 1,000 HD VOD titles per month. Verizon joins other "terrestial" video operators trying to leverage HD VOD against the perceived HD advantage for linear channels offered by DirecTV and DISH Networks.

Both DirecTV and DISH ran into major HD setbacks this week. A new satellite that DISH planned to use for HD channels encountered a problem after its launch and its future is uncertain. The SES AMERICOM AMC 14 satellite was unable to get into its proper orbit after launch. DISH was planning on leasing the satellite for HD capacity, specifically for local HD channels. In another unrelated setback, DirecTV’s latest satellite launch has been delayed. They had scheduled a launch for Monday of this week, but it is delayed indefinitely. DirecTV plans on using this latest satellite for HD capacity as well, hoping it will help them achieve their promised 150 HD channel line up.

These delays put a cloud over both DirecTV and DISH, considering HD is seen as a competitive advantage for DBS over cable and IPTV. Most likely the setbacks are temporary ones. Perhaps they will give competitors some time to play catch up. The news looks worse for DISH. If the AMC 14 issue can’t be positively resolved, DISH will face major setbacks with its HD strategy. Even if they manage to get the satellite into its proper orbit, it will burn precious on-board fuel, significantly reducing its service life. Whatever the outcome, DISH’s HD strategy will be impacted, and not positively.

DirecTV has added four new markets to their local HD line-up, bringing the total to 76 markets where they offer the local broadcast stations in HD. The new markets include Cedar Rapids-Waterloo, IA, Louisville, KY, Paducah, KY, and Wichita, KA. DirecTV also currently carries 92 national HD channels.

Time Warner Cable is upping the ante on its Start Over technology, by extending it to HD channels. Start Over allows subscribers to come into a program after it has already started, and start it over from the beginning. Start Over was pioneered by Time Warner Cable, and many of their cable company brethren including Comcast and Brighthouse have embraced the technology for their own networks. Start Over will initially launch in Time Warner’s South Carolina markets.

Comcast announced that they will begin offering certain HD video on demand titles the same day those titles are released on DVD. Comcast joins other operators, including DirecTV, which are experimenting with same day VOD (or PPV in DirecTV’s case) releases. These developments are shrinking typical release “windows,” which normally have a 30 to 45 day delay between DVD and VOD/PPV releases. Hollywood studios and their content distribution partners (Comcast, DirecTV, etc) are experimenting with same day releases to figure out the impact on revenue models. Studios have historically made the lion’s share of their motion picture release revenue from DVD sales and rentals. They now want to find out if they can match (or hopefully exceed) DVD release revenue with VOD and PPV revenue. Hence the release experiments.

Should these release experiments prove successful, there is even talk of theater and VOD releases happening simultaneously. In this possible future scenario, consumers could go to the theater for $10 to watch a new movie release, or they can order the new release on demand for viewing in their “home theater” for $30. We’re a long way off from that, but these shrinking release windows are pointing in that direction. There are competitive implications hidden in these experiments as well. Vertically integrated media companies like Time Warner for example, may have the opportunity to provide Time Warner Cable with blockbuster releases on better terms (or windows) than Time Warner Cable’s competitors. Or maybe Comcast’s market power allows them to negotiate better release window deals than their competitors. Telecom competitors like Verizon will have some negotiation leverage as well. Their vast wireless distribution network gives them an advantage over cable competitors. Movies are extremely valuable in the multichannel subscription video competitive landscape. All service providers should watch these developments closely.

DISH Networks will launch an all HD programming package, beginning February 1st. According to Home Media Magazine, the package will offer 70 national HD channels for $29.99/month. Local (where available), sports, and premium HD channels can be added at additional cost. DISH claims to have 76 HD channels currently, with a goal of 100 by year end.

Comcast announced its latest competitive strategy at CES yesterday, Project Infinity. Infiniti aims to dramatically increase the amount of content available via video on demand. Comcast CEO Brian Roberts says by the end of the year, Infiniti will bring over 1,000 HD VOD titles each month to subscribers, which quadruples their current offering. Eventually, Comcast intends to get to 6,000 titles per month, with half of them being in HD. The move is pointed squarely at Comcast’s competitors, namely DirecTV, but also Verizon and others.

Comcast is trying to trump DirecTV’s (and to some extent DISH) momentum with linear HD channels, which is now approaching 100. With the new Infiniti project, Comcast can make the claim that they offer the most HD programming, which includes linear and on demand choices. VOD has always been seen as a competitive advantage for landline multichannel video operators. Comcast is hoping to exploit that advantage even further with HD availability. Comcast also announced the launch of Fancast, an online video play with content from a variety of sources, including a partnership with hulu. One last thing, Comcast has quietly become the fourth largest telephone company in the U.S. by line count, surpassing Embarq. They now have just over 4 million telephone subscribers.