Dish Slings OTT Service – What It Means

LAS VEGAS -- Dish is boldly going where no pay-TV provider has gone before.

As it seeks to fend off the competitive threats posed by the planned mergers of AT&T Inc. (NYSE: T)and DirecTV Group Inc. (NYSE: DTV) on one side and Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) on the other, Dish Network LLC (Nasdaq: DISH) is introducing radical new TV features and services that are guaranteed to shake up the industry. In December, the company launched Netflix on its Hopper DVRs -- the first major pay-TV provider in the US to do so. (See Dish Makes Room for Netflix.)

Now, at CES, Dish is unveiled its long-awaited online video service, Sling TV.

Sling TV, which is set to roll out later in January, will sell for $20 per month without a monthly contract (users get one video stream only). It will include a slimmed-down bundle of just a dozen or so TV networks available over the Internet. At the center of the Sling TV bundle is ESPN, but additional channels include HGTV, Cartoon Network, the Disney Channel and more.

Noticeably missing from the Sling TV package are all of the major broadcast networks and some of the top cable networks, including AMC and FX. But customers can add on genre-based packages (starting with "Kids Extra" and "News & Info Extra" when Sling TV launches) for an extra $5 per month.

The limited selection of TV channels is deliberate. Dish is not trying to replicate the traditional pay-TV bundle online. It's trying -- in a profitable way -- to break it down.

"The reason for that product existing is because we knew there are customers who want that pared-down package… it was obvious," said Dish Senior Interactive TV Product Manager Jason Henderson.

Henderson also emphasized, however, that Dish doesn't believe Sling TV will create more cord-cutters by cannibalizing the pay-TV industry's customer base. "We're very excited," he said, "and we absolutely believe it will be additive."

That, of course, is where the big debate begins. Can pay-TV providers (not to mention programmers) still make money with smaller content packages? And now that Dish has opened the door, will others follow suit?

Want to know more about OTT video? Check out our dedicated OTT content channel here on Light Reading.

In a discussion on the topic at a CES Digital Hollywood panel on multiscreen strategies Monday, Piksel Global Vice President Jody Stark cited a promising case study. In the Middle East, he said, TV provider OSN recently launched a pared-down TV package and hasn't seen any noticeable drop in traditional subscribers. Stark added that he thinks new TV bundles "will grow the overall size of the pie."

Others experts agree and believe that the trend toward skinnier TV bundles and even à la carte programming is just beginning. On the à la carte front, Eric Fitzgerald Reed, Verizon Communications Inc. (NYSE: VZ) vice president, entertainment & tech policy, predicted that "you're going to see more of that come to fruition."

Adobe Systems Inc. (Nasdaq: ADBE) Director of Product Marketing Campbell Foster also noted that service providers will simply find new ways to monetize these offerings. There might be heavier ad loads or a greater focus on bringing back old content for a chance at new revenue, he said.

In short, while there will likely continue to be some hemming and hawing over how to create profitable new TV products, it does appear that the dam has broken. Sony Corp. of America introduced a brand new Internet TV offering late in 2014, and now Dish has taken things even further by separating the ESPN crown jewel from the traditional cable bundle.

What happens next is anybody's guess. But it sure will be fun to watch.

— Mari Silbey, special to Light Reading

Phil_Britt 1/8/2015 | 10:09:17 PM
ESPN the Difference Maker This type of service offered by others has always been interesting, but the big block for myself and several other sports fans has been the lack of ESPN and other sports content. If Dish is successful, look for other providers to start adding more sports to their "sticks," which could truly pinch the cable providers.
mhhf1ve 1/7/2015 | 6:24:54 PM
A La Carte ain't cheaper, necessarily I think we'll eventually find out that buying a bunch of channels separately from different providers may not end up cheaper than some of the bundled packages that are currently offered... It's going to be a confusing marketplace of channels and shows and apps and on-demand services for consumers. And it will all still rely on a decent internet connection. So if net neutrality doesn't turn out the way consumers would like, then that'll make things even more confusing and expensive. yay!

And this Dish launch itself is confusing -- seeing that it doesn't make it clear that Slingboxes are totally unrelated and the internet connection must be provided by someone other than Dish. I don't think Dish's satellite internet service can handle this?
cnwedit 1/7/2015 | 9:50:28 AM
Re: Cord-cutters Might Buy Into Cheaper Online Package Well, most of the money spent at Starbucks would be better placed in a credit union but a Starbucks gift card remains the present of choice for many under-30 somethings. 

But you make a good point. Internet access is the service younger folks can't live without and if they have a smart phone, they quickly discover it's better to have Internet and WiFi at home to keep their data charges down. So they start there and it's not the lowest tier they want. 

So tha's the given and the discretionary spend is what comes next. Today, I'd bet that Netflix and Hulu Plus re the prime players with the newer services such as HBO Go also competing. That's the landscape in which DISH must compete. 
comtech3 1/7/2015 | 6:14:52 AM
Re: Cord-cutters Might Buy Into Cheaper Online Package Consider this, a Tivo OTT DVR for $50.00, $15.00/ month for the service, $20.00/month for SlingTv, and the lowest tier Internet service, say $40/month. That adds up to $75.00/month which does not includes taxes and ancilliary fees! Not to mention how reliable will the streaming service from Dish Network be given that those video streams are using the Internet without any guarantee of QoS? If Sling Media Sling Box is any indication of what to expect, then that $20 fee for this new service would be of better use if placed in the credit union!
cnwedit 1/6/2015 | 3:13:40 PM
Cord-cutters Might Buy Into Cheaper Online Package There is a whole generation of younger viewers who have never subscribed to cable packages because they are viewed as too expensive and have been watching their video almost exclusively online. They might be attracted to the DISH Sling offer but only if they want those specific channels, and I'm not sure it's all that attractive a package. 

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