Reinventing the game

I remembered exactly the first time I heard about Destiny Cable.

A friend then was so excited about this new promo. Destiny was offering to sell TV sets at very low prices to whoever signs up for cable TV subscription. And soon enough, people were lining up for the promo. Who wouldn’t?

Destiny Cable president David Lim vividly remembers those early years. He recalls how he gathered a handful of people, there were seven of them all in all, who created seven one-man departments and who would write the content providers and other business partners, copy furnishing the six others as if it was really a big organization.

It was also David’s idea to bundle the TV sets, which he was buying straight from the manufacturers and therefore the low cost, with the cable TV subscription and still make some money. Destiny’s rates were also slightly lower than its competitors, and in less than five years, the company was already a strong number three in the market.

It was a labor of love for him, so to speak. So it was also painful for him to watch his baby‚ gasping for breath when the Star Group, which distributes to the Philippines some of cable TV’s most watched channels like ESPN and Star Sports, pulled out from Destiny citing no reason at all. From about 25 percent in Oct. 2002, Destiny’s market share dropped to around 15 percent as of latest count.

So it was very easy for David to have accepted an offer from SkyCable, which has already merged with Home Cable, to also join the group. But he was not about to quit. David, like his mother Elena, was made of sterner stuff.

So he said no to the offer. Instead, he joined forces and merged with Global Cable, a minority player in the local cable TV business. He met Philip Chien, whose family was the partner of Eastern Multi-Media (a huge company in Taiwan) in a cable TV venture in Taiwan, who wanted to expand Global’s presence in the Philippines. By merging with Destiny, Global would be able to expand by riding on the former’s infrastructure. Destiny, on the other hand, would benefit from the content that Global and Eastern would be able to provide (Global was carrying the Star channels).

With the merger, David who is now the president of the Solid Group and who has officially taken over the business from his mom has decided to concentrate on tapping the huge potentials of Destiny other than the cable TV business. There was broadband and VOIP (Internet telephony) which had tremendous potential in the local market. Philip, on the other hand, would be running the CATV affairs and Destiny’s employees on the cable TV side would now be transferred to Global.

A friend recently asked me if Destiny would now be able to topple Sky and Home. For one thing, Sky and Home have around P2.5 billion in debts as well as a huge interest burden. Destiny had cash and little, if any, debts. Sky and Home are going into tiering of their offerings, which means that very soon, their subscribers will have to pay more if they want to continue getting all the channels that they are currently getting. On the one hand, Destiny which is also going into tiering by next month will be offering a higher-priced package for subscribers who want to get more while those who are already contented with what they are getting in terms of programs right now do not have to pay more. When this happens, expect a lot of Sky and Home subscribers to migrate to Destiny.

But if Destiny will have its way, it does not want cable TV operators to be differentiating in terms of content. After all, a recently approved circular of the National Telecommunications Commission (NTC) now prohibits exclusivity arrangements between CATV operators and content providers. Whoever can give the subscribers the best price given the same set of programs will lord it out over the others.

But more the price, David believes that customer satisfaction is another key area of differentiation among the operators. The company has invested in technology that will allow it to determine any potential problem area even before the subscriber can detect it. After all, this is what makes small but strong players survive against the bigger but impersonal ones.

Hidden Agenda can be reached at [email protected].