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?
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