The video world is abuzz about SlingTV, the new over-the-top service from Dish Network that gets you ESPN and a handful of other channels for $20/month with no long-term commitment. The service won “Best of CES” at the Consumer Electronics show and represents a major development in the pay-TV delivery market. But what does it mean for Independent TV providers across the country? How can existing TV providers turn this in to an opportunity for growth?
Pay-TV Pricing Changes and Smaller Bundles are Coming
For years subscribers have been agitating for smaller, more-affordable video packages containing just the channels they want. At the same time, content owners have enjoyed an extended run of annual price increases and ever-expanding channel bundles, which they force on operators. With operators obliged to pass on these programmer price increases to subscribers, the business model has increasingly strained the operator-subscriber relationship. This legacy business model is about to change.
While Dish has done a masterful PR job spinning SlingTV as an OTT service for live, multiscreen TV, the reality is that the excitement around the package is due primarily to its affordability and content — not the delivery mechanism. Dish CEO, Joe Clayton, admitted as much during a presentation at CES when he said:
“Affordability is the key attribute of our new Sling Television service. Sling TV will be substantially, and I mean substantially, below the current linear pay-tv offerings and I mean even less than the high-priced Internet TV options from our competitors. We expect to launch packages in the near future that allow customers to tailor their experience.”
The Content Providers Have Blinked
The most significant aspect of the SlingTV announcement is the willingness of major content owners like ABC Disney (owners of ESPN), Turner and Scripps to allow their content to be packaged, priced and sold in such a disruptive package. This emerging change in the live content business model may be the most significant development for Independent operators since the introduction of HD. This is great news for Independent operators as it will open the door to new and innovative ways to license, package and bundle video content. Operators will soon be able to launch content-rich, adaptive bit-rate streaming services that leverage their substantial broadband local-loop investments. After all, “over-the-top” video has to go over the top of a broadband network and Independent operators own that last mile. HD and emerging 4K video are bandwidth hungry, and only operators who own their infrastructure can ensure convenient and reliable service over the long run.
Operators should start working aggressively with their content negotiation teams and via industry groups to ensure that they have equal access to flexible bundling and pricing options that allow them to compete on a level playing field. It is bad for the content owners and bad for the industry if the right to bundle content in this way is held in the hands of just the few largest operators. There is no technical reason not to ride in the wake of the national, regional and local media coverage that SlingTV is generating. Operators could potentially offer the same content bundle Sling is pitching over existing cable or IPTV networks and may want to start talking publicly about their plans to offer exciting new combinations of content and services.
Multiscreen Is the Next Step
For multiscreen support, existing video headend infrastructure can be easily and affordably extended to include delivery of these new bundles to multiscreen devices and continue to compete head-on against Dish and SlingTV. Inca Networks is an expert in Intelligent Video Delivery, and the broader eco-system has reached a level of affordability and maturity that brings multiscreen within reach of even smaller operators. Operators should consider investing in internal trials to test ABR streaming on their networks, and ensure they are ready to launch once content licensing allows.
Don’t Fear an Imperfect Offering
While interesting, the SlingTV offering is not a direct service replacement for a large portion of TV subscribers. At launch the service is only available on a “single stream/single device” basis, a model that is not viable for families with multiple viewers and TV sets. Another major restriction is that there is no DVR component, although there is a limited 3-day “catch-up” feature for some content. The service is, however, available on a pay-as-you-go basis, with no upfront fees or long-term commitments. The $20/month service includes the following channels: ESPN, ESPN2, Disney Channel, ABC Family, Food Network, HGTV, Travel Channel, TNT, CNN, TBS, Cartoon Network, Adult Swim, and the “best of Internet video” with Maker Studios. It does not include any local broadcast channels, a major weakness for primetime content. Subscribers bring their own playback device and the service will be available on a variety of connected TV, console and mobile devices. Dish has stated that their target market is 18-35 year olds who do not currently subscribe to a video service.
Independent operators tend to have closer relationships with their subscribers and communities and better understand the demographics and needs of their markets. Subscribers have proven local content, digital video recorders and local support matter — giving independent operators a strong advantage.
Leverage Your Unique Value
Unlocking flexibility on the content side, while leveraging substantial broadband investment in the local loop network and pairing that with community engagement programs will provide a unique offering that isn’t easily matched. Independent operators can reposition themselves to enjoy a leadership position in the next wave of video and extend their business in to the new world of multiscreen and intelligent video delivery.
SlingTV makes for interesting headlines, but the real value to the market is the glimpse it is providing in to the willingness of content owners to open up their business model and accept the market has evolved. Independent operators who capitalize on this will see significant rewards and be well-positioned for the future and potentially expanding their service areas via their own over-the-top service.
Author: Jeff Campbell, CEO, Inca Inetworks
Source of photo: http://www.zagg.com/community/blog/dish-sling-tv-service-ces-2015/
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