Hundreds of thousands of people have already preregistered for Sling TV, the new over-the-top television service from Dish Network.
Sling TV was officially introduced at the Consumer Electronics Show on Jan. 5. At that point, the company put up a website allowing consumers to preregister, and Sling TV officials say the response has been overwhelming.
“We were building something pretty interesting but the reception that we got was beyond anything I could have imagined,” says Roger Lynch, CEO of Sling TV.
Sling TV is offering a handful of networks, led by ESPN, for $20 a month. Other networks on the service include CNN, TNT, TBS and Adult Swim from Turner, Food Network and HGTV from Scripps Networks Interactive and Disney Channel and ABC Family from Disney.
“The response has been phenomenal, so when we start rolling out, we’re going to have to start with just the people who preregistered,” Lynch says. “People can still preregister, but we’ve had hundreds of thousands of people [sign up]. And there’s been no marketing.”
Few of those signing up appear to be customers of Dish’s traditional satellite TV service, or of other satellite, cable or telco providers.
Lynch said the company cross-checked the names that preregistered for Sling against Dish customers. “There were virtually no Dish customers in it. It was less than one-half of one percent,” he says, adding, that if those customers had come from existing pay-TV subscribers, “you would expect it to be roughly 14%”—Dish’s share of the pay-TV market.
The introduction of Sling TV is the beginning of the TV businesses reaction to the popularity of streaming services, led by Netflix.
The number of pay-TV subscribers has been slowly shrinking and there is concern that the availability of more streaming services will accelerate the decline.
“The introduction of Dish Network’s Sling TV OTT service, and the launch of Sony’s OTT service later in the year will potentially cause market growth to slow even further,” says analyst Crag Moffett of MoffettNathanson Research.
But Moffett adds that the OTT products on the horizon are unlikely to be extremely popular—although he predicted an early surge for Sling TV.
“Neither [Sling TV nor Sony’s Playstation Vue] is likely to set the world on fi re. Nor is the planed OTT service from CBS (where the median age of a viewer is 59 years old), or even the HBO service,” he says.
“The Dish product is too expensive to attract large numbers of non-sports fans and it doesn’t have enough regional sports to capture the true sports enthusiast,” adds Moffett, who also expects Sling TV to jump out of the gate relatively quickly based on its novelty and press attention before it relatively quickly loses momentum.
“The Sony product is harder to forecast, as we know far less about it, but its reported price points are likely to limit uptake,” he says.
Moffett sees the appeal of these services being limited. “Millennials aren’t waiting for a lower-priced package of the same content; they are abandoning the ecosystem altogether in favor of content produced on and for social media at a fraction of the production cost of traditional pay-TV,” he says.
Getting customers to sign up for OTT isn’t easy. While Netflix has managed to increase its subscriber count to 39.1 million in the fourth quarter of 2014, Aereo, which aimed to provide Internet users with feeds of broadcast network programming, despite all the publicity it garnered, ended 2013 with only 77,596 subscribers. It was later shut down when the U.S. Supreme Court ruled its service was illegal, as the broadcast networks had claimed.
ANALYST SAYS VIACOM PLUNGE MAKES CBS MERGER A TASTY DISH CONCERNS THAT
Dish Network could drop Viacom’s networks led to a plunge in the programmer’s stock. But one analyst says that sign of vulnerability could push Viacom back into a combination with CBS.
Michael Nathanson of MoffettNathanson Research thinks 91-yearold Sumner Redstone, who controls both companies, ought to put them together again. “We have consistently believed that the concept [of separating Viacom and CBS] made poor strategic sense. In an industry where scale matters in negotiating leverage vs. distributors, we never understood why each side of the house would be better off smaller,” Nathanson said in a research note.
CBS and Viacom deliver 24% of all national viewers, but they get paid only 15% of affiliate fees. Companies that combine broadcast and cable assets get fees equal to or greater than their share of viewers. A combined company also might be better able to support emerging channels such as CBS Sports Network, Epix and a possible CBS News Network. “We think both Viacom and CBS investors would be rewarded when and if this consolidation is ever consummated,” Nathanson said.