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Sling TV Avoiding Exclusive Content's Slippery Slope

20 Apr, 2016 By: Erik Gruenwedel

Netflix is slated to spend upwards of $6 billion on original and exclusive content this year. Amazon Prime and Hulu have ratcheted up their respective content spending as well. Sling TV wants to try another — less expensive — strategy, CEO Roger Lynch told analysts.

Speaking on the April 20 fiscal call, Lynch, who helped launch the industry’s first online pay-TV service operated by Dish Network in February 2015, was asked how Sling TV was prepared to combat upstart over-the-top video services from AT&T (Fullscreen), Verizon (go90) and Sony PlayStation’s Vue, among others.

While admitting that OTT video has lower barriers to entry than conventional cable, satellite TV and telecom multichannel video program operators, Lynch said that unlike subscription video-on-demand, online TV doesn’t cater to original content. He said the majority of pay-TV channels licensed online domestically are not on an exclusive basis.

“I don't think it's going to be exclusive content that's going to drive the differentiation,” Lynch said.

Instead, the executive contends the way to attract subscribers and generate incremental revenue is through innovation, including improved user interfaces, on-demand access and functionality (pause, stop, rewind, etc.).

That's a tall order considering Sling was often hamstrung with technical glitches during its first year of service. While much of the programming is available on a “live” basis, it featured had ESPN — the first time Disney allowed third-party access to its signature sports network without an authenticated pay-TV subscription.

When higher-than-average traffic attempted to stream semifinal matches in the 2015 NCAA Men’s Div. 1 Basketball Championship, the service crashed. Similar glitches occurred when AMC Network streamed the first episode of “The Walking Dead” companion series, “Fear the Walking Dead.”

Sling subsequently improved its backend support, in addition to third-party relationships with Roku and other streaming conduits. It recently upped the number of streams a subscriber could simultaneously access.

More importantly, Sling — and parent Dish — believe OTT distribution affords programmers with improved advertising vehicles.

“We think that the advertising model in OTT is in many ways superior to what it is in a traditional linear business because every ad can be targeted, and we have lots more data that can be used for that targeting and therefore there's more value, both for our programming partners and for us in the advertising model,” Lynch said.

“I think anyone who is going to succeed in OTT is going to have to be able to move very fast to be able to continue to innovate quickly and build their brand and grow their business and try to get scale that will bring them some other benefits in programming costs, but also on the advertising side.”

Meanwhile, Dish does not disclose Sling TV subscriber data, which some observers peg at 500,000 members. The satellite TV operator includes Sling subs in overall pay-TV data.

In the first quarter, Dish activated approximately 657,000 gross new Pay-TV subs, compared to about 723,000 gross new Pay-TV subs in the prior year's first quarter. Net Pay-TV subs declined about 23,000 in the quarter, compared with a gain of approximately 35,000 in the first quarter 2015.

The company closed the first quarter with 13.8 million Pay-TV subs, compared with 14 million pay-TV subs at the end of first quarter 2015.

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