$20 price point could be the key to Sling TV's 'escape velocity,' analyst says

The rapid pace at which Sling TV responded to reviewer complaints about a too-skinny core offering--by adding Univision and AMC Networks channels just before its nationwide launch--shows that Dish Network's (NASDAQ: DISH) new OTT service can outdo traditional cable when it comes to upgrades. But it's the $20 price point that will really slingshot the service out ahead of pay TV, an analyst with The Diffusion Group says.

"No, it's not the a la carte 'instant nirvana' that the blogosphere endlessly chatters on about, but it is clever, practical, and potentially highly disruptive all at the same time," wrote TDG Senior Advisor Joel Espelien in a blog post exploring Sling TV's moves after initial reviews from the media and select invited users.

Espelien compared the market potential of Sling TV's low price point to Apple's (NASDAQ: AAPL) game-changing 99 cent pricing for music downloads on its iTunes service. A key factor in Apple's disruption of music sales was consumer dissatisfaction with CD prices. Similarly, Dish's OTT service could tap into subscribers' deep unhappiness with their pay-TV services. "If the $20+$5 pricing model catches on and spreads to other MVPD OTT service offerings, the effect on the industry will be much more significant than Sling TV's short-term uptake," he said.

Based on at least one review, Sling TV's pricing strategy is iffy, but bulking up its core channels could help sway potential subscribers. "I like what I've seen of Sling TV, but after my early access, I wondered if there was really enough here to justify a $20 per month subscription," wrote Cult of Mac's John Brownlee. "The addition of AMC, though, changes all that."

Wired's Tim Moynihan pointed out that "While Sling TV's base package is roughly the same cost per month as basic cable--according to a mid-2014 FCC report, the average cost for basic service is around $23--it does offer significant savings compared with your average expanded basic package."

Slate's Will Oremus found that, as a long-time cord cutter, getting used to Sling TV's locked-in linear stream was a bit difficult. "What if saving money isn't the main reason that I and so many others are going without cable?" he wrote, explaining that going without cable for years has changed his viewing behavior. Neither sports nor always-on news, like HLN, hold his attention for long.

Sling TV is missing a lot of features its potential subscriber base wants. But that is not so important in the short term, according to Espelien. Netflix's (NASDAQ: NFLX) streaming library in its first couple of years was "pathetic," he noted. But the SVOD provider's ongoing improvements helped it achieve "escape velocity" and move well ahead of the competition, something Sling TV could do.

With other pay-TV providers and broadcasters prepping (or, in the case of CBS, already having launched) their own OTT services, it's a sure bet that the entire industry is watching how Dish's streaming offering will resonate with consumers.

For more:
- see this TDG post
- Cult of Mac has this post
- see this Slate review
- and this Wired story

Related articles:
Sling TV opens to U.S. subscribers; adds channels, expands Roku models
Sling TV to add Univision to program guide
Parks on HBO cord-cutting worries: Don't panic

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