With DirecTV, Hulu and YouTube all set to launch virtual pay-TV services in the coming months, what are the chances that the market’s first entry, Dish Network’s pioneering Sling TV service, will sustain its rapid growth?
Not great, analysts say.
“Is the market big enough for all these services? The answer is no,” said Frost & Sullivan analyst Dan Rayburn to Bloomberg. “They are all targeting the same audience, offering the same channels, and there just isn’t enough room for more than four players.”
Amy Yong, an analyst at Macquarie Capital USA Inc., believes the technical issues Sling TV has endured will limit its competitiveness. Out the gate in 2015, the service had notable technical issues with highly watched events such as Turner’s Final Four coverage and HBO’s Game of Thrones premiere. Complaints remain in regard to how the Sling TV app performs on platforms like Xbox One.
“While the others were still taking their time to get it right, Dish rushed Sling to the market ahead of everyone,” she said. “One thing about TV consumers, they aren’t very forgiving, particularly when they can get service.”
Since launching in February 2015, Sling TV has amassed a subscriber base estimated to number around 1 million. The service offers a $20-a-month base package of top cable channels (ESPN, TNT and AMC, just to name a few), all available for single-stream-at-a-time viewing. Over time, Sling has added modular add-ons, such as broadcast networks (NBC, ABC and FOX), regional sports networks and range of other channels. There’s also a multi-stream option.
But even Sling TV CEO Roger Lynch agrees that the market is only so big.
“At some point there will be too many entrants and eventually a shakeout of the weaker ones,” he told Bloomberg. “We feel confident we will come out OK.”
So how big is the market? “We believe there’s a market of approximately 20 million households who currently do not subscribe to pay-TV,” Tony Goncalves, senior VP of strategy and business development for AT&T Entertainment Group, told FierceCable. “It’s not only younger consumers. We’re looking to attract both cord-nevers and cord-cutters -- those who want more choice and flexibility to access a premium content bundle more tailored to their lifestyle.”
For his part, Lynch dismisses the notion that Sling TV is competing for the same customers as upcoming virtual entrant DirecTV Now.
“DirecTV Now sounds like a big bundle that replicates cable TV. That has never been our strategy,” he said. “We have a $20 package that no one else does. When the whole industry is headed in one direction, sometimes it’s good to go in the other direction,” he said.