Why does DIRECTV extend your contract when you activate a receiver?

Because it just makes good sense. OK, it’s true — no one likes to be tied down to another two years just because they want to add a TV to the bedroom. Yet that’s just what DIRECTV and most other cable and satellite providers do. It seems unfair, but let’s look at it from both sides.

You’ve said you want to add a receiver to your account, that probably means you’re going to be hanging around anyway, so really the extra commitment doesn’t mean much on your end. But on the provider’s end, it’s a big benefit in so many ways. Take a look:

They can amortize the cost.
The real cost of that receiver or DVR is quite a bit more than you’re paying, even if you’re paying the “rack rate” of $99, $199 or $299. By putting you under a commitment, DIRECTV can gamble on your adding additional services, and make some of their money back with the monthly receiver fees.

They can plan ahead for future needs.
DIRECTV needs to know years in advance what their needs are, because they need to make contracts, place build orders, and be ready when you’re ready to add a receiver. Keeping people on contract makes it easier for them to plan, and when they plan right, it keeps costs down for you. Remember, DIRECTV hasn’t changed the prices on its receivers in nearly a decade, so they must be doing something right.

This allows them to manage their new and existing customer deals better.
Asking up front for an extended commitment means that fewer people will try to play the expensive game of trying to cancel just to get a better deal. This was popular a few years ago when another web site reported that all you needed to do was say “cancel” at the voice prompt to get almost anything you want. That play was overused and DIRECTV really cracked down. So blame the people who abused the system.

Sure, it sounds like all the benefit is on DIRECTV’s end but you’re also getting a receiver or DVR for a low out-of-pocket expense and in that two years, you can bet on numerous upgrades and improvements, too!