Major cable and satellite providers tend to stick to the traditional party line that over-the-top (OTT) services, like DirecTV Now and Sling TV, are being designed to supplement traditional television devices, not replace them. While that may have been the initial intention, the market has shown that consumers are starting to prefer OTT services over the more traditional pay-TV services like cable and satellite. DISH Network CEO Charlie Ergen believes that OTT services are the future and traditional television models will have to adapt or get left behind.
DISH Network first launched Sling TV with the intention of having it supplement their traditional pay-TV subscriptions. The services was wildly successful; so much so that DISH executives began to wonder if focusing on OTT services is the key to continued growth. On a recent call discussing DISH Network’s Q4 performance, Ergen said that OTT services, like Sling TV, are “…becoming a direct replacement for cable and satellite”.
As the conversation shifted to more traditional pay-TV services Ergen remarked on the necessity of traditional models adapting to the changing market. “If they continue to raise prices, [and] continue to have 16-to-18 minutes of advertising per hour…then that deceleration will increase,” Ergen said. The OTT world “is more consumer friendly.”
DISH Network’s Sling TV continues to dominate the OTT market. While DISH doesn’t report separate numbers for Sling and DISH Network TV subscribers, we do know that combined they exceeded expectations during Q4, bringing in 28,000 new customers. DISH needs to continue this momentum as new competitors, like the live-streaming service planned by Hulu (which is owned by Disney, Fox, Comcast and Time Warner), lurk hoping to encroach Sling’s share of the space.
Dish shares are up about 1% today after it reported positive Q4 2016 results. Earnings at 70 cents a share exceeded analyst expectations of 66 cents, though revenues, at $3.72 billion, fell short of the targeted $3.76 billion.
Pay-TV is not going anywhere anytime soon, particularly with their continued dominance of live-sports, but we are entering the twilight years of traditional paid television. The big question that remains, is who will come out with a product that will satisfy both the cord-cutters and bring over the remaining pay-TV hold outs. For now, Sling TV is leading the charge.