Dish To Offer A $20 Per Month Streaming Service With 12 Networks Including ESPN
Dish Network (NASDAQ:DISH) has introduced a new streaming service, Sling TV, primarily aiming at the millennial audience and broadband-only subscribers. The service is priced at $20 per month and will give the satellite company another targeted revenue stream. [1] Sling TV streaming service will offer access to sports and entertainment networks. It does not require a Dish pay-TV connection and it can be accessed at various devices. Dish is not alone foraying into this arena with CBS and HBO also launching their respective Over-The-Top services.
Sling TV streaming service in its base package will offer 12 networks including ESPN, TNT, TBS, Disney Channel, ABC Family and CNN. It will also offer content from Maker Studios. It must be noted that Maker Studios produces videos for YouTube and was acquired by Disney (NYSE:DIS) in 2014.
We believe that the launch of streaming services is a smart move, which will aid Dish’s overall revenue growth. There are 10.6 million broadband-only subscribers in the U.S. [2] Dish can generate of more than $600 million in revenues if it manages to capture around 3 million subscribers, representing more than 25% of this market. The company will pay $12.86 per month to the content providers, according to MoffettNathanson Research. [3] This will translate into 35% profit margin for the company.
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The buzz on the street is about the appeal of this new streaming service. While it offers some of the live television programming at one fourth the price for a pay-TV connection, it has some limitations. Sling TV does not allow simultaneous streaming by more than one user at a time and the streaming will play full-length advertisements as in television. While the subscribers can watch some of the shows that have aired in the past three days, it does not support a recording feature as in a pay-TV DVR. [3]
At this stage, it is unlikely that this service will warrant any caution for the pay-TV industry but it does offer a platform where the live content can be watched on-the-go on any device. The service could include many more networks in the existing bundle in the coming years. Also, from a subscriber point of view, bundling makes more sense. For instance, if one wants to have streaming access to HBO, CBS and ESPN, it would make little sense to shop for three different streaming services of each provider. On the other hand, if one operator could provide all three networks in a bundle, it would be more appealing for the consumer. Dish has also amassed wireless assets over the past few years in order to compete better in the saturated U.S. pay-TV market by offering a viable bundling option where it can combine its satellite service and wireless capabilities to offer consumers a single subscription. Sling TV could become an important part of the company’s wireless vision with a possible bundling option of streaming and mobile services.
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- Sling TV to Launch Live, Over-the-Top Service for $20 Per Month; Watch on TVs, Tablets, Computers, Smartphones, Game Consoles, Dish Network Press Release, Jan 5, 2015 [↩]
- Dish Network Unveils Sling, a Streaming Service to Rival Cable (and It Has ESPN), The New York Times, Jan 5, 2015 [↩]
- Wall Street Wonders: Will Dish Network’s $20 Streaming Service Threaten Pay TV?, Deadline, Jan 6, 2014 [↩] [↩]