Dish Network (NASDAQ:DISH) introduced Sling TV, its new stream, in January. The service has witnessed encouraging adoption and currently has around 250,000 paying subscribers.  However, Sling’s adoption levels are nowhere near industry leader Netflix’s. Dish is also working very hard to improve the consumer experience in order to enhance the popularity of the streaming service. However, some concerns still plague the Sling TV streaming service. We thus provide the following overview of the service.
Our price estimate for Dish stands at $79.50, implying a premium of about 10% to the market.
An Update On Sling’s Performance
Sling TV’s base package is priced at $20 per month and offers a good mix of sports channels, such as ESPN and ESPN2 as well as entertainment channels such as AMC, TNT, Disney Channel, Cartoon Network/Adult Swim etc.  The service also offers various paid add-ons depending on consumer preferences. Sling was made available to all U.S. subscribers in February and piqued the interest of around 100,000 subscribers one month down the line.  Technology news website re/code now reports that the streaming service has continued to experience good adoption rates and currently has 250,000 paying subscribers.  Sling is primarily targeted at the 10.6 million broadband-only subscribers in the U.S. and we believe that the service has the potential to maintain its current subscriber momentum in the coming quarters.  Dish can generate around $ 1 billion in annual revenues if the streaming service manages to penetrate around 40% of its target market in the long run.
Certain Areas Of Improvement
Sling TV is still far short of Netflix’s (NASDAQ:NFLX) level when it comes to subscriber additions. Netflix added 2.28 million U.S. subscribers during the Jan-March quarter and projected 600,000 net additions during the April-June quarter.  The subscriber numbers in the Jan-March quarter are usually boosted by the after-effects of the holiday season, which means that Netflix’s second quarter numbers are better comparable to Sling’s. Sling has attracted 250,000 subscribers from the start of February to the start of June, which roughly means an addition of 60,000 subscribers per month. This figure pales in comparison to Netflix’s projections of 200,000 subscribers per month for the company’s April-June quarter. Netflix already has an established presence in the market and is reaping the rewards of the popularity of its brand. Dish will need to spend more on advertising and roll out more promotional offers in order to increase its own brand value if it aims to emulate Netflix’s subscriber numbers.
Dish will also need to work on Sling’s infrastructure. The streaming service could not handle the influx of users who logged on to watch the semi-finals of the NCAA March Madness college basketball tournament.  As a result, Sling put out choppy or nonexistent streams, which frustrated users. One of Sling’s biggest selling points is that the streaming service provides a cheaper alternative to watching sports as compared to traditional pay-TV. However, Dish must realize that an important sporting event will inevitably result in a jump in Sling’s viewership and should increase capacity accordingly. Frequent missteps in this regard could lead to a large portion of the sports loving crowd losing its faith in the streaming service.
Certain Kinks Notwithstanding, Dish Getting A Lot Of Things Right
Dish continues to expand the platforms which support Sling TV’s streaming service in order to enhance the user experience. The service was already supported by Roku players, Roku TV models, Android and iOS, as well as the Mac and PC at the time of its launch.  Dish recently launched Sling’s Android TV app for Google’s (NASDAQ:GOOG) Nexus Player.  The launch was accompanied by a promotional offer which allowed customers to sample Sling TV free of cost for seven days on their Nexus Player. Dish had earlier added Xbox One to the list of platforms that can support Sling, with member also getting an exclusive extended free trial for 30 days. 
Dish also launched a Spanish language variation of the streaming service, Sling Latino, in order to provide Spanish-speaking and bilingual viewers more choices in TV content.  Sling Latino was made available in two packages, the base package Paquete Total (22 channels at $12/month) and the cheaper option Paquete Esencial (16 channels at $7/month). Both packages offer live and on-demand content, including sports, family programming, general entertainment and movies. In addition, Sling Latino offers two packages containing popular channels from Spain and Colombia, allowing customers to enjoy Spanish-language content along with the standard English-language offerings.
Dish has also worked tirelessly in improving the content available on Sling TV. The streaming service already offered a good mix of popular sports channels such as ESPN and ESPN2, and entertainment channels such as AMC, TNT, Disney Channel, Cartoon Network/Adult Swim, etc., at the time of its launch.  Dish hit a home run when it announced in April that Sling TV will carry HBO Now for an additional $15 a month.  HBO Now is the over-the-top subscription video on demand (SVOD) service offered by HBO. This announcement came before the season premiere of the hit series Game of Thrones on April 12, which allowed subscribers to enjoy the whole season on the Sling platform. The company has also signed deals that added channels such as IFC, Sundance, EPIX, A&E, HISTORY, H2 and Lifetime to Sling’s continuously expanding repertoire.   All this leads us to believe that the streaming service is heading in the right direction. Sling’s acquisition of popular sports and entertainment content will go a long way in enhancing its marketability and attracting more subscribers.
The rumored Dish – T-Mobile (NYSE:TMUS) merger could also lead to an opportunity for Dish to promote Sling TV. (Related – Merger With T-Mobile The Right Step, But Dish Needs To Speed Things Along)) If the merger goes through, Dish could offer free-of-cost promotional packages of the streaming service to T-Mobile’s 57 million strong subscriber base. An exposure to such a large consumer base could be very positive for the streaming service. If around 10% of T-Mobile’s customer’s opt for Sling service after the initial trial, Dish could generate additional revenues in excess of $1.3 billion.Notes:
- Sling TV’s Web TV Subscriber Numbers Keep Growing, Now Around 250,000, June 5, 2015, re/code [↩] [↩]
- Sling TV: Everything you need to know, January 20, 2015, cnet.com [↩] [↩]
- Sling TV’s Web-TV Service Attracts at Least 100,000 Sign-Ups in Its First Month, March 5, 2015, re/code [↩]
- Dish Network Unveils Sling, a Streaming Service to Rival Cable (and It Has ESPN), The New York Times, Jan 5, 2015 [↩]
- Q1 15 Letter to shareholders, April 15th, 2015, Netflix Investor Relations [↩]
- Sling TV Says It Dropped the Ball During March Madness. When Will Web TV Be Ready for Primetime?, April 5, 2015, re/code [↩]
- Sling TV Launches Live, Over-the-Top Service Nationwide, February 09, 2015, Business Wire [↩]
- Sling TV Releases App for Android TV, Including Google’s Nexus Player, May 21, 2015, BusinessWire [↩]
- Sling TV Launches Today Exclusively on Xbox One; Xbox Members Get Exclusive One Month Free Trial, March 17, 2015, Xbox Wire [↩]
- Sling TV Launches “Sling Latino” with Top Spanish Channels, Country-Specific Options, June 04, 2015, BusinessWire [↩]
- UPDATE 1-Dish, Time Warner come to new agreement; Sling TV gets HBO, April 1, 2015, Reuters [↩]
- Sling TV Folds IFC, Sundance TV, And EPIX Into Its Program Offerings, March 4, 2015, Deadline [↩]
- Sling TV to Deliver A+E Networks’ Channels by End of March, March 17, 2015, Business Wire [↩]