Linear OTT's biggest value proposition: churn doesn't matter

AMSTERDAM -- Roger Lynch, the head of Dish Network-owned linear OTT provider Sling TV, isn't concerned about subscriber churn. At least, that's the face he presented to audiences at IBC in a keynote presentation. The reason? Churn is not such an expensive proposition for OTT providers as it is for pay-TV operators.

"This is another way that OTT is different from pay-TV," Lynch said. "In the U.S., the average cable company has a subscriber acquisition cost of $850." That cost includes marketing to potential subs, signing them up, providing them with leased set-top boxes, and so on, all adding to an operator's costs. That's an investment that the pay TV operator has to get back from the customer, meaning it's in the operator's best interests to keep that customer for as long as possible.

"With a service like Sling it's just the opposite. It's almost no cost to bring someone on," he said. Sling TV offers a free trial, and if subscribers drop off after the trial ends, they can still come back later. "We make it really easy to sign up."

Because the service is delivered over streaming devices owned by the consumer, like Roku or Amazon Fire TV, equipment and possible truck rolls aren't necessary and up-front acquisition costs are much lower.

Cable companies also have another revenue stream: They're often the only decent broadband provider in a given area.

"Cable companies are well positioned in the US. Your only broadband option really is cable. DSL doesn't have the speed," Lynch said. "And cable makes fantastic margins on broadband."

Full coverage: IBC Live 2015

Related articles:
Dish's Sling TV CEO: We might build an app for the new Apple TV
Netflix, Hulu subscriber churn should be a concern for OTT providers, research firm says
Comcast's Stream gets mixed reviews, but will likely keep Sling TV on its toes

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