Why Dish Network Needs To Focus On Sling TV
With mounting subscriber losses (nearly 400,000 total in the last two reported quarters) Dish Network (NASDAQ:DISH) is banking heavily on its streaming service Sling TV to hedge against cord cutting. The company does not report Sling TV numbers separately, and Dish’s high subscriber losses indicate that Sling TV might be losing its novel appeal. With competition in this segment getting intense with AT&T’s launch of DIRECTV Now, Dish Network is now looking at improving the services offered by Sling TV to attract more subscribers. Recently Sling TV announced that it is rolling out a cloud DVR beta program where consumers will be able to record movies, episodes and TV series and watch them whenever they want. At launch consumers will receive free 100 hours of cloud DVR storage. This move should help Sling TV compete better with Sony’s PlayStation Vue which has cloud storage and allows users to keep content for 28 days. While Sling TV can help Dish Network in containing its Pay TV subscriber losses, initiatives to stay ahead of competition will be crucial for Sling TV’s long-term success.
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Customer Convenience, Costs Key Factors For Success
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As AT&T launches DIRECTV Now, competition in the streaming service segment is intensifying. AT&T has revealed that the streams from DIRECTV Now will not count against any data caps mobile users may have, making it a very cost effective option for users. Hulu and YouTube are also likely to launch their TV streaming services in 2017 and the space is likely to get crowded. Accordingly, companies are looking to differentiate themselves. As other players roll out initiatives aimed at customer convenience and lower costs, Sling TV cannot lag behind. Despite an early advantage, Sling TV does not appear to have been able to make significant headway in the streaming service market. While Sling TV numbers are not reported by Dish, estimates suggest that the OTT segment 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. As Dish Network reels under pressure from losing subscribers, an increased focus on Sling TV to develop a competitive edge is critical.
According to our estimates, Satellite TV accounts for nearly 30% of Dish Network’s valuation and we expect Dish’s Pay-TV market share to decline from around 13.4% in 2016 to nearly 12.4% by the end of our forecast period. The success of Sling TV could help the company stem these declines.
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