After positioning its OTT service, Sling TV, as a “complementary” product to traditional pay-TV services since it launched two years ago, Dish Network pivoted today, with Chairman and CEO Charlie Ergen conceding that virtual MVPD services have become “direct replacements for cable and satellite.”
Speaking to investment analysts and reporters during Dish’s fourth-quarter earnings call today, Ergen said Dish had been “dragged into” this brand positioning by competitors such as AT&T’s DirecTV Now and Sony PlayStation Vue.
“Obviously, the DirecTV Now product is a direct replacement for cable and satellite,” he said. “So is the Sony product. We’ve gotten dragged into that, and maybe that’s not my first preference.”
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Roger Lynch, CEO of Sling, noted that when the IP-based service launched two years ago, it had a much narrower selection of content and was primarily targeted toward younger consumers who never had pay TV.
As the channel selection has steadily expanded, Lynch conceded, so has the target market.
“We’re seeing a broadening of our demographic,” he said. “We’re getting people from all age groups.”
For Dish, today’s comments reveal merely a change in executive linguistics; the company, in its advertising, has been directly targeting traditional cable for some time, evidenced by its national campaign of TV ads starring tough-guy character actor Danny Trejo.
For his part, Lynch said the entry of the highly anticipated DirecTV Now service into the market didn’t have a profound impact on Sling TV’s growth. This was borne out by Dish’s overall subscriber metrics, which returned growth (plus 28,000) for the first time in 10 quarters.
Lynch continued to make the case that the OTT market merely expanded to accommodate with DirecTV Now’s entry. However, his tone changed a bit in regard to the upcoming launch of Hulu’s virtual MVPD service.
“I expect they’ll do a good job with their launch, and that will have an impact on our market share,” Lynch said.
Asked by Wells Fargo analyst Marci Ryvicker if Dish would answer how many subscribers Sling specifically brought in during the fourth quarter, Lynch responded with a simple “no.”
Not that Ergen is hiding the fact that Sling TV is growing while Dish’s traditional satellite business is shrinking. In the call, he lamented that programmers need to start treating traditional linear TV like they do OTT distribution.
“The decline of linear TV will be driven by how programmers react,” Ergen said. “If programmers continue to raise prices, if they continue to put 16-18 minutes of advertising into a show, it’s going to continue to decline. … You’ve got to make linear TV look more like an OTT product.”