Monday, February 22, 2016, 11:03 AM ET|Posted by Will Richmond
Skinny bundle service Sling TV got a lot of press last week as parent company Dish Network reported its Q4 ’15 and full year results. Based on a lot of assumptions, analysts MoffettNathanson estimated that Sling TV ended the year with 523K subscribers. Meanwhile, the WSJ cited unnamed sources estimating Sling TV now has more than 600K subscribers.
Once again, Dish Network provided no detailed breakout on Sling TV’s subscriber growth. As many analysts have observed, that’s a deliberate strategy to obscure the subscriber losses occurring in Dish’s core direct satellite service. On the earnings call, Sling TV’s CEO Roger Lynch only said that the vast majority of Sling TV subscribers are not currently pay-TV subscribers, noting they were either cord-nevers or cord-cutters.
The former are dominated by millennials and the latter likely has high representation as well. And that brings me back to my initial review of Sling TV from a year ago, where I outlined the pros and cons of Sling TV and in particular its limited appeal to millennials.
There’s no question Sling’s $20 base rate (before all the add-on channel bundles) represents a great bargain relative to the sticker shock of most pay-TV bundles. But still, Sling TV’s limited 20 channel line-up (up from 12 at launch), emphasis on linear viewing (now with limited VOD selections) without ad-skipping, time-shifting or binge-viewing all seem completely out of synch with the average millennial’s expectations developed from years of watching Netflix, Hulu, Amazon, etc.
Arguably, Sling TV’s biggest drawing card was inexpensive access to ESPN. But even that advantage may disappear soon, as ESPN president John Skipper said last week that ESPN is discussing deals with other prospective skinny bundles. For now, while ESPN is Sling TV’s sports anchor, true sports fans would be underwhelmed with Sling TV because no regional sports networks (RSNs) are available. A $5/month “Sports Extra” tier offers only less popular sports networks.
From the start, the biggest hole in Sling TV’s lineup was the broadcast TV networks, which still attract a large audience. Sling TV has begun addressing this issue by including ABC TV affiliate feeds in in its “Broadcast Extra” package. But these are only available in 8 geographic areas of the U.S. collectively serving less than 25% of the U.S. population, according to the company.
On the earnings call, company executives elaborated on how difficult it is to piece together a comprehensive broadcast TV offering giving the fragmented industry structure with affiliate TV station and owned and operated stations. Then there’s the issue with networks like CBS which are pursuing their own direct-to-consumer strategies. And finally there’s the problem of the content already being available via Hulu or another service, which undercuts its value to Sling TV. In short, Sling TV’s ability to include any kind of comprehensive broadcast TV offering remains a long shot.
When you add up all of these issues, it still seems to me that Sling TV will be a relatively tough sell for a broad swath of the millennial market. Layer on the various technical issues Sling TV endured during its first year (leading Dish CEO Charlie Ergen to say Sling TV is “still a science project”) and the road ahead seems even more uphill.
I still give Sling TV lots of credit for experimentation, but overall I remain skeptical about the strength of its appeal. It would be great to see more details from Dish such as Sling TV’s churn rate and how many months an average subscriber is staying on, what a subscriber’s ARPU looks like, what the subscriber acquisition cost is, what they’re watching and more.
Until we know more about the durability of Sling TV, I’m still hard-pressed to see it having a big market impact.