Industry Voices—Groch: Prime Day promo roll-off cuts into Sling TV’s subscriber base

Sling TV
The Sling TV promotion was available only to new Sling subscribers, so not all of those Fire TV stick purchasers would have been eligible, but it’s easy to see how this promotion would have put the streaming live TV service in front of a massive audience, and at a very cheap price. (Sling TV)
Emily Groch Industry Voices

Dish Network just announced that Sling TV posted its first quarterly net subscriber loss since its launch. This is a big swing for the service, considering that Sling’s 94,000 subscriber decline in the fourth quarter of 2019 followed an impressive gain of 214,000 in the quarter prior. Dish blamed increased competition and programming gaps for the decline. While these factors undoubtedly had an impact, it’s likely that the losses were compounded by users rolling off of Sling TV’s big Prime Day promotion. That promotion likely inflated Sling’s third quarter subscriber adds, and the count came crashing down when customers rolled off in the fourth quarter.

Amazon’s Prime Day has become the online shopping event of the summer, when the retail giant attracts customers with more than 24 hours of deals, including special offers on Amazon-branded hardware, such as Fire TV products. On July 15, 2019, customers purchasing a qualifying Fire TV device not only secured an attractive discounted price on the hardware, but also Sling TV monthly credits that would enable them to get the service for $10/month for three months (down from $25/month).

How big a deal could this promotion really have been for Sling TV?

The activation email sent to
new Fire TV users in the U.S.
(Amazon)

Pretty big. First, Amazon reported that it sold millions of Fire TV devices globally on Prime Day 2019. While that doesn’t help narrow down the number of U.S. purchases, Mintel ePerformance/eDataSource estimates that Amazon sent more than 750,000 “Welcome to the Fire TV Family” emails in the U.S. during the two weeks following Prime Day (these emails were sent upon device activation). The Sling TV promotion was available only to new Sling subscribers, so not all of those Fire TV stick purchasers would have been eligible, but it’s easy to see how this promotion would have put the streaming live TV service in front of a massive audience, and at a very cheap price. Ultimately, we think the Prime Day deal was largely responsible for Sling TV’s impressive third quarter subscriber additions, its best quarterly subscriber net adds since the fourth quarter of 2017.

What goes up must come down?

Customers activating the Sling TV promotion in July or August would have rolled off the discount in the fourth quarter. So, although Prime Day sales of Fire TV devices helped boost Sling’s third quarter numbers, it’s likely that many of these customers chose not to stick around when the promotion ended.

On top of this, Mintel/Pathmatics observed that Sling TV dramatically reduced its online ad spending after March 2019. The biggest drop occurred from the second quarter of 2019 to the third, when Sling TV cut its online investment nearly in half. It was unusual to see ad spend so low in August and September, when virtual MVPDs are usually ramping up spend across marketing channels to capitalize on the start of football and fall TV seasons. It was also strange to see that spend remained suppressed in the fourth quarter, considering that Sling TV must have anticipated that customers would be rolling off of the Prime Day deal, and might have increased marketing investment in hopes of bringing on new subscribers to fill the gap.

What we think

Promotions on no-contract services like streaming video can be great for consumers. However, the company offering the deal is under significant pressure to prove value before the promotion ends. Sling TV’s fourth quarter subscriber losses are a prime (no pun intended) example of what happens when brands are able to get customers using the service, but don’t prove value when they get there. The same concerns about promo roll-offs also apply to other month-to-month services like Disney+ and Apple TV+, which will also feel the effects of promotional roll-off later this year, unless they are reaching the right consumers with their promotions, and providing enough value for subscribers to stay (or they extend their promotions).

Emily Groch is Comperemedia’s Director of Insights, Telecommunications. She pairs her deep knowledge of marketing within the telecommunications industry with Mintel’s consumer research, trends, and competitive marketing intelligence to build timely, meaningful stories for Mintel and Comperemedia telecom clients. Emily travels throughout the US and Canada to present industry marketing trends and insights to major TV, Internet, and wireless service providers, and their advertising agencies.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceVideo staff. They do not represent the opinions of FierceVideo.

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