Sling TV Takes Center Stage

Not many people can agree on what Sling TV — Dish Network’s long-awaited over-the-top service — really is.

But the new offering, introduced as Dish CEO Joe Clayton was banging a bass drum on a stage at last week’s International CES in Las Vegas, is sure to be a disruptor.

The $20-per-month, 12-channel singlestream service is about $10 per month and has eight to 18 fewer channels than some had speculated it would — even Dish chairman Charlie Ergen had hinted at a service priced at $1 a day as recently as November. With sports networks ESPN and ESPN2, plus TNT, TBS and Adult Swim, the service could lure at least some of its target market of single, urban, apartment- dwelling males once it is officially introduced sometime later this month.

Customers who want more channels can get them. At CES, Clayton literally banged the drum, trailed by a troupe of actors in kangaroo costumes, for Sling TV and a litany of other products. Later, Sling TV CEO Roger Lynch said add-on packages of genre channels for news, sports and kids will be available for $5 per month.


Conspicuously missing from the package were any broadcast stations, Fox channels like FX and FXX (the home of The Simpsons and It’s Always Sunny in Philadelphia, two programs popular with young males), and youth-skewing Viacom networks such as MTV and Comedy Central. A+E Networks, which had announced an OTT deal with Dish late last year, also wasn’t part of the announcement, but could show up in later iterations of the product.

The absence of those channels and more could be a big factor in deciding whether to subscribe to Sling TV. The five most-watched programs by millennials are The Big Bang Theory (CBS), The Walking Dead (AMC), American Horror Story (FX), NCIS (CBS) and Game of Thrones (HBO), according to research company Barna Group. None of those programmers have a deal with Sling TV.

HBO is planning its own OTT launch later in the year, so Sling customers could subscribe to that separately. And Viacom has been open to licensing its networks over the top — it signed a deal with Sony for its planned service — so it could, in theory, strike a deal with Dish as well.

CBS, which launched its own OTT service late last year — CBS All Access, which includes its primetime broadcast content — may be a little trickier.

Still, some touted the service as a move toward a la carte, the first step in removing the cable yoke from the collective necks of America. Others saw Sling TV as either a curiosity, a product that could make a dent in attracting cord-cutters or cord-shavers or cord-nevers to the pay TV universe, or as a product that will draw a collective yawn from younger viewers.

In a blog post titled “Ladies and Gentlemen, Please Start Your Worrying,” MoffettNathanson principal and senior analyst Craig Moffett took the middle ground. Despite the drawbacks — it has only a dozen channels, only one device at a time can use the service, and programming contracts will likely place a cap on how many customers it could have — Moffett said he believes the service at least lays the groundwork for a more disruptive over-the-top product.

“We think Dish’s service is likely to be much more successful, and much more disruptive, than the HBO and CBS services that have garnered far more attention but which will likely be much less attractively priced,” Moffett wrote in his blog.


Cable operators concentrated on the price of the service. At $20 per momth, and with a $65 to $70 standalone broadband connection fee, dropping cable for Sling TV could end up costing consumers more than a 150-channel cable double or triple play.

“I don’t necessarily find the $20 a month, one device, very limited programming choice option to be something we feel will apply to any type of a broad market,” Cablevision Systems vice chairman and chief financial officer Gregg Seibert said at a recent industry conference. “I’m sure there will be niche users that will take it up, that type of a service.”

Other executives at the same conference, including Comcast Cable CEO Neil Smit, echoed the same sentiment. But what Seibert said next is more telling and shows that cable operators aren’t ignoring the threat of OTT.

“We recognize that the business will change over time,” Seibert said. “There’s more OTT coming, there’s more SVOD coming, but at this point in time we don’t believe it’s going to have a material effect on our business.”

More are coming. At least four other services are expected to make their debut this year — the HBO product, an OTT offering from CBS’s Showtime Networks, the Sony offering (PlayStation Vue) and a “mobile-first” product from Verizon Communications. The popularity of Sling TV could either spur or discourage the creation of even more.

Sony has already started to beta-test its 75-channel PlayStation Vue, although pricing and packaging will be disclosed upon its official launch later in the first quarter. Verizon chairman and CEO Lowell McAdam said recently its OTT product will be launched in the second half of the year and have between 20 and 30 channels. He declined to reveal how much it will cost.


Analysts are split as to the impact Sling TV will have. Moffett noted that at the $20 price point, the initial 12-channel Sling TV package is likely operating at a loss and any profit will come from the $5 add-on packages, which have a cost base of under $1 per subscriber per month.

Pivotal Research Group principal and senior media & communications analyst Jeff Wlodarczak estimates Sling TV will attract only a “couple of hundred thousand subscribers” — but he believes it is at least worth a try.

Although Wlodarczak said he doesn’t see a lot of upside for Dish in Sling TV, its real value may be in what the satellite company can learn from the service, not necessarily how many customers it signs up.

“Why not go for it?” Wlodarczak said. “Maybe [Dish] can capture some cord-cutters, get some knowledge around advanced advertising and experiment with going direct.”