Hughes Network Systems' DirecPC this month will simplify its subscription offering, boost ad spending and test radio advertising for the satellite Internet service.
The company will continue to do only limited joint marketing with sister DirecTV, however, despite the crossover appeal of the two services.
The Hughes Electronics division is expected to spend more than $10 million this year on the service via CKS Partners, New York, up 50% to 60% from last year. The radio ad test kicks off this week in five cities.
HALF OPT FOR DIRECDUO
DirecPC, introduced to consumers in fall 1996, requires a $300 dish. But more than half of the consumers who have signed up opt for DirecDuo, a $700 package added last summer giving access to DirecPC and DirecTV.
The Hughes service is the only high-speed Web access available to homes nationwide, giving Hughes a hot product for consumers who want speed but don't want to wait for cable or phone companies to roll out speedy Internet access.
"Getting people aware of [the service] is our challenge," said Senior VP Paul Gaske. But "the value proposition is there."
Hughes expanded distribution last year, so DirecPC is now available at such key retailers as Comp-USA and Circuit City Stores. Mr. Gaske is counting on distribution and the ad boost to raise awareness.
Another obstacle is that DirecPC downloads content at high speed from the satellite, although consumers must upload content over regular phone lines through an Internet service provider, typically charging $20 a month.
To streamline subscribing, DirecPC last week announced a deal with Epic Internet allowing customers to buy DirecPC and an ISP at a lower bundled price.
But TV/Internet convergence isn't here yet. DirecDuo dish owners wanting both satellite TV and Internet must do separate deals with DirecPC, based in Maryland, and DirecTV, based in California.
Also, in many stores, the computer department sells DirecPC and DirecDuo while the TV department handles DirecTV, a source of potential confusion for customers.
Mr. Gaske agrees that upscale technophiles who make the plunge into DirecTV are good prospects to buy his service.
"We certainly . . . are trying to work more closely" with DirecTV, he said. "I think over time you'll probably see more integrated programs."
Copyright March 1998, Crain Communications Inc.