Sling TV Is Cannibalizing DISH
It was back in January 2015, when Sling TV premiered, and within no time, they have had anywhere between 500,000 and 600,000 subscribers. Currently, DISH Network began charging $20 for approximately two dozen channels available through their extravagant Sling TV service. Despite the great difference between the average billing of Sling TV subscribers and DISH’s regular satellite TV subscribers, they merged the two services. Unfortunately, over the course of last year, they ended losing 81,000 subscribers.
If it was not for their Sling TV subscribers, that number would be much higher. While companies like Comcast began rising in the pay-TV market, DISH’s satellite business had encountered an insurmountable barrier. Even though Sling TV is one of DISH’s own offerings, services like these have ravaged the market for traditional TV services, including DISH Network themselves.
An Innovation Or A Mistake?
DISH CEO had initially believed that Sling TV would help their existing business move forward, but is now certain that their own service “will cannibalize [their] business.” Then again, DISH Network would currently be worse off if they did not have their Sling TV subscribers.
Sling TV is the first live streaming TV service in the nation, which definitely makes it innovative. Soon after Sling TV’s debut, a similar service was also released by Sony that is only available in particular cities at the same price as tradition cable bundles with considerably more channels. Comcast also introduced their own streaming package exclusively to Comcast Internet subscribers, which included HBO and broadcast networks.
According to reports, even Amazon.com is working on a streaming service that will offer a limited bundle of channels. Even Apple wishes to head in a similar direction with their own streaming service, but they have apparently run into a wall with their endeavors. The bad news for Amazon, Apple and Sony is that they do not have any television business at the moment. It is less costly for companies like Comcast and DISH Network to enter the pay-TV market and compete against each other with services like Sling TV.
How Has Sling TV Affected DISH’s Business?
DISH Network’s average revenue per subscriber had risen in 2015 even though they are charging merely $20 per month for Sling TV. Apparently, DISH is losing satellite business as a result of the growth of Sling TV, which means that average revenue per subscriber can be expected to dwindle. DISH’s CEO believes that better ad revenue will make up for the decline in billing revenue, since it is possible to tailor digital ads to different viewers.
However, it is actually feasible for DISH to offer Sling TV at a competitive price and 1-month free trial. DISH’s customer acquisition and operation expenses have declined by 15% as of 2015. They no longer have to spend on sending trucks, installing satellites, providing and setting up set-top boxes in order to acquire customers.
At the same time, it is proving challenging to scale the service. Unlike VOD, live TV subscribers tend to be less tolerable when it comes to buffering and outages. Sling TV customers were disappointed when they found nothing but blank screens when they attempted to watch the NCAA Basketball Championship through the service. It could potentially cost DISH to prevent such outages from taking place again.
In conclusion, it is not all that difficult for DISH Network adopt $20-per-month customers in place of $100-per-month customers, considering that they are the biggest tech company in the world. Above all, they will be able to retain their subscribers instead of just losing them.