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.
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.