Like AT&T, Dish’s video strategy is a little hard to decipher, with the satellite operator seemingly trading higher margin linear satellite TV customers for virtual Sling TV customers, many of whom are paying $20 a month for pay-TV service that includes pricey channels like ESPN.
“By our estimate, Dish’s traditional satellite TV [customer base] is shrinking at a 9.1% clip,” noted MoffettNathanson analyst Craig Moffett, who advised investors to ignore the inflation to the subscriber numbers from Sling TV because “those subscribers have almost no economic value.”
By Moffett’s estimate, Dish lost 285,000 linear customers in the second quarter—hemorrhaging only eclipsed by the second quarter of 2016, when it lost an estimated 330,000 satellite TV subscribers.
Dish offers a lower priced pay-TV opportunity vs. cable in many markets. But there are plenty of program service interruptions, with the operator constantly waging a retransmission/carriage war with one network conglomerate or another.
Dish certainly deserves some credit for being out in front of the virtual MVPD revolution. Sling TV is estimated to have amassed an industry-leading 1.7 million subscribers, based on a modular pricing model that truly is an innovation over more standard “skinny bundling” strategies of other vMVPDs. Many of these other services are really just slimmed-down versions of traditional pricing schemes.
Dish and AT&T may be addressing the demands of younger consumers who have fled—or never entered—the pay-TV ecosystem. But in order for these vMPVD models to make our grade, they have to prove that they are viable businesses. Notably, in the case of Sling TV, there is no wireless or broadband component for Sling TV to drive business to.
“Most of these [vMVPD] businesses are at best break-even or money losers,” Moffett noted. “This is shaping up to be a truly lousy business.”
Meanwhile, Sling TV’s future was cast into some doubt recently when founding CEO Roger Lynch bailed for Pandora.