Dish Network finally pulled the cover off its long-awaited over-the-top video service, unveiling Sling TV at the Consumer Electronics Show in Las Vegas, a 12-channel single stream product available for just $20 per month.
The new OTT product is not to be confused with another similarly named Dish product – Sling Media’s Slingbox – which allows owners to watch TV shows on their computers outside of their homes. Sling TV is a separate brand and product, according to Dish.
Dish first announced its intentions to develop an over the top service aimed at young, single urban professionals in March, shortly after its landmark carriage agreement with Disney.
The new OTT service was expected to be launched in the summer, but as rights issues began to mount, the release date was pushed back.
“We have been practicing for a long time,” said Dish CEO Joe Clayton in a briefing with reporters prior to the Jan. 5 launch. “The gun is loaded and we’re ready to fire.”
Dish began working on the OTT service years ago, and was encouraged by the success of its international OTT service, Dish World.
Dish World, launched in 2013, offers up to 200 channels of international programming in 16 languages.
While the service has been successful – Dish would not reveal subscriber numbers – Dish executive vice president for advanced technologies and Sling TV CEO Roger Lynch said the most encouraging development from the service is how international customers embraced the service as a complement to their existing satellite subscription.
“We got a whole new customer segment by launching the [Dish World] the over-the-top service,” Lynch said at the briefing. “What that has enabled us to do is develop a programming organization,” including marketing and call centers. It was really set up in a way to leverage the things that were needed for Dish like programming rights, but also as an independent group that could move quickly and not be sub to the priorities of the satellite business.”
Dish’s Disney agreement, which included OTT rights for five Disney networks: ESPN, ESPN2, the ABC broadcast network, ABC Family, Disney Channel, was a landmark pact in the OTT space. Since that time, other Disney deals – particularly with Dish rival DirecTV – have included OTT rights.
But Lynch said the Disney deal set the stage for other OTT agreements for the satellite giant, including deals with Scripps Networks, A+E Networks and Turner Broadcasting System.
At launch, the baseline service will have about 12 networks, including Disney flagship ESPN and ESPN 2, Food Network, HGTV, Travel Channel, TNT, TBS, Cartoon Network, Adult Swim ABC Family and Disney Channel, for $20 per month. In addition, subscribers will have access to a best of the Internet from Maker Studios, the largest short-form content provider for You Tube, attracting more than 9 billion views monthly and 600 million subscribers.
The price point, Lynch said, was arrived at because it is similar to the charges younger viewers are paying for Netflix, Hulu Plus and Amazon Prime online video services. The service can be viewed on a subscriber’s tablet, television set or smartphone, but is a single- stream service, meaning that it can only be watched on one device at a time. The $20 monthly fee covers about 12 traditional channels and additional networks are available through genre packages covering sports, kids and news, for an additional monthly fee of about $5.
The Dish service is the first OTT offering out of the box, but it won’t be the only one. Later this year OTT offerings from Sony (PlayStation Vue, slated for commercial launch in the first quarter) Verizon, Home Box Office and CBS’s Showtime Networks are expected to hit the street. And even at a lower than expected price point – Dish chairman Charlie Ergen hinted the OTT offering could be priced at $30 per month as late as November – it still is more costly than traditional cable, satellite and telco service on a per-channel basis. According to the National Cable and Telecommunications Association, the average cable package costs about $75, and for roughly 150 channels that works out to about 50 cents per channel. At 12 channels, the Dish service is priced at $1.67 per channel.
Lynch said Dish had to be selective in picking networks for the OTT service that met the way young consumers consume content.
“From a programming standpoint, we had to be really careful about the deals we did,” Lynch said at the briefing. “It would have been easy for us to do deals earlier on if we just agreed to say ‘let’s just take these big pay TV packages and put them online.’ We would have ended up with $60 or $70 bundles. We don’t think that is the way to reach that demographic. We spent a lot of time working with programmers to make sure we had smaller bundles, lower costs and more flexibility.”
From the start, Lynch said the most important deal to land was for ESPN, a channel, he called a major catalyst for picking any pay TV service.
But after that, he added that Dish focused on packages based on genres rather than going for a full ala carte offering. Lynch called the Dish service “a la carte-like without the complexity and frankly the impossibility of just doing straight a la carte.”
Dish CEO Clayton touted the service as revolutionary, adding that the marketing theme behind the product – “Take Back TV” – is a clear message to younger viewers who have looked at traditional pay TV service as not meeting their wants and needs.
Aside from its low cost, Sling TV will be available on multiple devices including Amazon Fire TV, Amazon Fire TV Stick, Google Nexus Player, Roku 3, Roku Streaming Stick, Roku LT, Xbox One, Macs and PCs and via iOS and Android mobile devices.
Clayton said the product is targeted at the 18-35 year olds, urban, well-educated and a segment he said has been ignored by the pay TV industry in the past.
“We do not expect to see any cannibalization of our existing core business,” Clayton said. “There might be a little bit, but we see this as one plus one equals three.”
In addition to the core channels – which could expand as the service matures – Sling TV will offer a thick on-demand lineup as well as access to online video.
At least initially, the service will be without broadcast networks – at the briefing Lynch said that Disney’s ABC will not be part of the $20 package, but later published reports said ABC could find itself on that lineup if the remaining three national broadcasters agree to carriage. Absent that deal broadcasters could end up on a separate tier for an additional cost.
Sling TV is the next in what has been a long line of innovative products Dish has released at the CES show – last year it unveiled the Hopper DVR service, which included an ad-skipping feature that is still giving some programmers fits. While there doesn’t seem to be an ad skipping capability on Sling TV, the product presents some attractive additional ad revenue opportunities, particularly around targeting and dynamic ad insertion.
And like Home Box Office, which announced in October plans to offer a standalone OTT service in 2015, Dish is going after the estimated 10 million broadband only households in the country for Sling TV. But Clayton was vague as to how any of those homes are occupied by single, young, urban professionals.
“We’ll sell bunches,” he said at the briefing.
And there also is a question regarding how many customers Dish will be allowed to sign up to the service. Back in May, Time Warner Inc., chairman and CEO Jeff Bewkes let the cat out of the bag at a Sanford Bernstein conference when asked about the validity of the Dish OTT service. Bewkes said he believed Dish’s programming deals capped the OTT service at between 2 million 5 million customers.
Clayton declined to comment on specifics of its carriage deals.
But Clayton sees Sling TV as another component in the evolution of pay TV, adding it could help reduce churn for customers who find it hard to pay the $85 to $100 per month on average for subscription TV.
“If you live in an urban market, this could be a save tactic for that customer,” Clayton said at the briefing. “Ultimately we want as many OTT customers, satellite TV customers, down the road we’re going to sell wireless into all of them. We want to grow our total collective customer base.”
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