The DTH industry grew quickly from its modes beginning with each new installation, and "word of mouth" advertising grew for the industry. Because early DTH systems were very large, simply having one installed drew the neighborhood's attention. Once non-dish owner experienced the diversity of satellite-delivered programming (new cable services were now rapidly launching), coupled with the unsurpassed audio and video quality offered by a DTH system, the "fever" began to spread across the land. For satellite TV to move beyond the "techies" and "early adapters" into the mainstream consumer marketplace, three things had to happen: price had to be reduced, the hardware's reliability and "user friendliness" had to increase significantly and the legality of dish ownership by private citizens
The industry found itself out of control. Hundreds of new dealerships were opening every month - with many new retailers having little, if any, true understanding of the product or long term commitment to the business. In fact, the satellite dish had become the "pet rock" industry of the year. This happened in an environment where programming was free - consumers made a onetime hardware purchase and enjoyed more than one hundred channels of high quality video, including every basic and premium cable service at no charge. Throughout the year several cable programming services announced plans to encrypt their satellite feeds under the authority granted by the 1984 Cable Act. Unfortunately, many retailers refused to believe that signal scrambling would occur.
January 15, 1986: The DTH World Changes Forever
January 15, 1986 began like any other day in America, and business was good for satellite retailers. As the day passed, video on HBO was replaced by scrambled lines and audio was gone. At that moment, the "hardware-based" DTH industry transitioned and was now driven by the sale of "software" (programming). As the news of scrambling hit the national media with inaccurate statements like, "...the skies have gone dark for dish owners," many cable operators depicted satellite dishes as expensive and ugly contraptions which now at best would make for Olympic-sized birdbaths. The DTH industry was staggered like a journeyman fighter who had just tasted the leather of a George Forman uppercut. The first blow was wholesale defection of retailers, followed by a bitter internal industry battle over scrambling which soon saw existing DTH system owners drawn into the "fight to preserve the free airwaves." Worse yet, the industry allowed this battle to spread to new consumers as they entered dealer showrooms to consider the purchase of a dish. It even gave birth to three nightly satellite-delivered talk radio networks (one hosted by this author) dedicated to discussing/debating the changing industry. The political fireworks generated by these shows demonstrated the fact that the industry was approaching a "meltdown." Impact on sales of new DTH systems was dramatic. The industry plummeted from 735,000 systems in 1985, to 225,000 units in 1986. An estimated 60 percent of retailers left the industry by year end. Clearly, the DTH industry was rapidly approaching a "fork in the road" on the way to survival or oblivion.