Weekly Pay-TV Notes: Dish’s Sling TV Adds College Sports Network Campus Insiders, Netflix Raises Prices In U.S. And Announces First Italian Original Series

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The pay-TV industry saw significant activity this week, with Dish Network’s streaming service Sling TV adding Campus Insiders to its ‘Sports Extra’ pack. This addition will provide Sling subscribers access to hundreds of live college sporting events from college conferences such as the Mountain West Conference, West Coast Conference, Patriot League and CIAA schools. On a separate note, streaming giant Netflix has announced that it will raise prices by $1.00 for its subscribers in the U.S., Canada and parts of Latin America. In addition, the company will produce its first Italian original series Suburra in collaboration with Italian producer Cattleya and public service broadcaster RAI. On that note, we discuss below these developments related to pay-TV companies over the past few days.

Dish’s Sling TV Bolsters Its College Sports Offerings With Addition Of Campus Insiders

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Dish Network‘s (NASDAQ:DISH) streaming service Sling TV is adding Campus Insiders, a Silver Chalice Ventures network, to its “Sports Extra” pack. [1] “Sports Extra” pack is a $5 per month add-on that is available to customers subscribing to Sling’s “Best of Live TV” core package. Campus Insiders will provide Sling subscribers access to hundreds of live college sporting events including baseball, football, basketball, volleyball, soccer and more from college conferences such as the Mountain West Conference, West Coast Conference, Patriot League and CIAA schools as well as the inaugural NOVA Home Loans Arizona Bowl. Sling TV already offers popular sports channels such as ESPN and ESPN2, two of the streaming service’s biggest attractions, and bolstering its coverage of college sports will help in enticing more sports fans to sign up. [2]

However, Dish will also need to improve Sling’s infrastructure if it wants to broadcast live sports events without interruption. 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 in April. [3] Resultantly, 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.

Dish Network’s stock gained around 6.8% over the week through Thursday. We currently have a price estimate of $71 for Dish Network. For the year 2015, we estimate revenues of $15.1 billion, in line with the consensus estimate, and EPS of $2.11, compared to a consensus estimate of $2.19.

Netflix Raises Prices In U.S. & Canada, Announces First Italian Original Series

Streaming giant Netflix (NASDAQ:NFLX) has decided to raise prices for its subscribers in the U.S., Canada and parts of Latin America. [4] The standard Netflix subscription will now cost $9.99, a $1.00 increase over the previous subscription fee. The rate hike is meant for the plan that supports two screens at once, while the one-screen and four-screen plans remain unaffected. Netflix had already increased prices in its European territories earlier this year. These price increases are in-line with our long-term view of the company. We believe that Netflix has enough room to raise prices of its subscription packages in both the domestic and international markets, and the company will continue to increase prices at periodic intervals over the next few years. Netflix’s pricing power comes from the exclusivity of its current and future original content, along with the repository and complementary nature of its services. (Read in Detail – Why We Believe Netflix Will Continue To Raise Subscription Fees Periodically In Coming Years)

Netflix has also announced that it will collaborate with Italian producer Cattleya and public service broadcaster RAI in order to produce its first Italian original series Suburra. [5] Suburra will be a 10-episode long original series based on organized crime and will be set on the Roman coast. Netflix will release the original series globally in 2017. Cattleya is an independent film and television producer with successful TV productions such as Gomorrah and Romanzo Criminale to his name. Success of Netflix’s US-centric original content has changed the perception of the brand in the mind of the consumers. The company is no longer viewed as just an aggregator of syndicated content, but also a creator of engaging content on its own. With Netflix crossing borders and increasingly focusing on international expansion, it is a great move to produce original content which is catered to the tastes of the foreign markets and also overcomes language barriers. Netflix will be launching in Italy on October 22, closely following the company’s entry into Spain (October 20) and Portugal (October 21). [6] These launches are part of the company’s aggressive international expansion strategy which intends to launch streaming services in 200 countries in the next two years. (Read in Detail – Launching Into Spain, Italy And Portugal Makes Sense For Netflix)

Netflix’s stock gained around 8.3% over the week through Thursday. We currently have a price estimate of $103 for Netflix. For the year 2015, we estimate revenues of $6.79 billion, compared to consensus estimate of $6.83 billion, and EPS of $0.20, compared to a consensus estimate of $0.24.

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Notes:
  1. Sling TV to Add Campus Insiders Network, Bolsters Live College Sports Offering, October 05, 2015, Business Wire []
  2. Sling TV: Everything you need to know, January 20, 2015, cnet.com []
  3. Sling TV Says It Dropped the Ball During March Madness. When Will Web TV Be Ready for Primetime?, April 5, 2015, re/code []
  4. Netflix Raises Price of Most Popular Plan by $1 per Month, October 8, 2015, Bloomberg []
  5. From The Creators Of Gomorrah And In Partnership With RAI Comes The First Italian Netflix Original Series: Suburra, October 5, 2015, Netflix Media Centre []
  6. Netflix Sets Exact Dates For Southern European Launches, October 1, 2015, Variety []