Is The Growth Of Dish’s Sling TV Slowing Down?

+102.58%
Upside
5.77
Market
11.69
Trefis
DISH: DISH Network logo
DISH
DISH Network

In its Q2 2016 results, Dish Network (NASDAQ:DISH)  reported a decline of 281,000 in net Pav-TV subscribers, a number which includes Sling TV (Dish’s over the top streaming service) subscribers. This number is significantly high compared to a net loss of 81,000 subscribers in the same period last year. While Pay-TV companies are heavily losing subscribers to the cord cutting trend, Dish partially shielded itself from this trend by launching Sling TV – a streaming service that can be viewed on internet enabled devices. The company has been focusing on Sling TV by adding packages and enabling multi-device streaming.  However, this strategy does not appear to be showing any significant results. Dish reported that gross new Pay-TV subscribers for Q2 2016 were 527,000, much lower than the 638,000 number for Q2 2015.  While lower new additions would lead to higher subscriber losses, it appears that Sling TV is unable to grow subscribers at the expected pace to adequately compensate for Pay-TV subscriber losses. However, this service is still at its initial stages and if Dish is able to create a competitive edge for Sling TV, it should drive revenues for the company in the longer term.

See our complete analysis for Dish Network

Growth Not Strong Enough To Compensate Pay-TV Subscriber Losses

Relevant Articles
  1. With Echostar Merger Approaching, What To Expect From Dish’s Q3 Results?
  2. Can Dish Network Stock Return To Its Pre-Inflation Shock Highs?
  3. Dish Stock Has Big Upside Potential To Its Pre-Inflation Peak
  4. How Will The Cyber Attack Impact Dish’s Q1 Results?
  5. Is Dish Network Stock A Buy Despite Many Headwinds?
  6. Will Dish Network Stock Continue To Underperform?

While Dish has been increasing focus on Sling TV,  it has not been able to significantly penetrate the so-called Over-The-Top (OTT) market, a term that encompasses the transmission of streaming content over the internet. As much as 95% of the OTT market is dominated by the top three players  —  Netflix , Amazon and Hulu. While Sling TV does not directly compete with these players (given that its content differs), user preferences for content, price points and streaming quality are key for any player to establish itself in this segment. While Sling TV numbers are not reported by Dish, estimates suggest that the OTT segment had added 129,000 subscribers during Q4 2015, taking its total subscriber count to around 525,000. However, according to Craig Moffet of Moffet Nathanson,  this growth has slowed down and Sling TV added only 49,000 subscribers in Q2 2016.

According to our estimates, Satellite TV accounts for around 30% of Dish Network’s valuation and we expect its Pay-TV market share to decline from 14% in 2016 to around 13% by the end of our forecast period.

We expect this decline primarily due to saturation in the U.S. Pay-TV market and we foresee alternative streaming media becoming more popular.  While Sling TV can potentially reduce Dish’s subscriber losses, the company needs to focus on its value proposition and content to attract and retain subscribers. Currently, the growth of Sling TV subscribers does not appear to be strong enough to compensate for Pay-TV subscriber losses.

We believe that, as Pay-TV companies adapt themselves towards changing consumer preferences,  Dish Network can benefit from Sling TV. The company needs to position this unit strongly and create a competitive edge for the streaming service. While subscriber growth does appear to be slow, Dish’s initiatives such as tie ups with several content providers and multi-streaming services should show results in the long term.

View Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research