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Why Dish’s Sling TV Skinny Internet Bundle Isn’t a Game-Changer

Dish Network’s Sling TV is a walking contradiction. It’s a pay-TV service aimed at people who don’t want pay TV. And therein lies the heart of its problematic marketing proposition.

At CES, the satcaster is launching Sling TV: a low-cost, broadband-delivered TV service with a dozen channels, accessible anywhere on a bunch of different devices.

The real breakthrough of Sling TV (such as it is) boils down to this: You can get ESPN — along with TNT, Food Network and a few other cable channels — for just 20 bucks per month instead of shelling out $60 or more for cable or satellite TV. Yeah, it has a slick interface and some interesting features, but Sling TV is really a test of the appeal of a drastically pared-down channel bundle.

Is it enough to prod millions of cord-nevers to open their wallets? I’m not convinced Sling TV will fly. Here are its key drawbacks:

  • No broadcast TV content. To me, this is a big Achilles’ heel. For Dish, there’s an economic rationale here: It doesn’t have to pay top dollar for rights to carry ABC, CBS, Fox or NBC. The exclusion of broadcast also lets Dish avoid the logistical hurdle of market-by-market negotiations for individual local stations. But this is a big black hole in the lineup, given that broadcast is home to numerous popular primetime shows and live sports. Sling TV could, at some future date, provide broadcast TV as a separate, premium tier; the broadcasters aren’t likely to play ball, although it’s possible a deal with Hulu Plus could fill the gap. (Side note: The FCC is considering adopting a rule that would treat online video providers like cable TV… but Dish actually doesn’t want to be in a position where Sling TV is subject to the same must-carry and retrans rules as traditional pay-TV operators.)
  • Large swaths of cable TV aren’t available. Sling TV initially is providing two optional, premium tiers of additional networks for $5 per month each: “Kids Extra” with Disney Junior, Disney XD, Boomerang, Baby TV and something called Duck TV; and a “News & Info Extra” add-on with HLN, Cooking Channel, DIY and Bloomberg TV. Are those worth 5 bucks each? In any case, for now, most cable nets aren’t available through the service at any price. That includes HBO and Showtime, as well as AMC, home of “The Walking Dead,” one of the highest-rated shows on TV. I could go on — there’s no way to get Fox News, Discovery, Comedy Central, Nickelodeon or regional sports networks through Sling TV today (or maybe ever).
  • No DVR. You can’t record shows on Sling TV. Instead, the service provides a “catch-up” on-demand feature with access to the last three to seven days of each channel’s shows (depending on the agreement with the programmer). That’s fine. But it’s decidedly not binge-friendly: You can’t store up several weeks of a show to watch later.
  • Limited to a single video stream per account. This was stipulated in the Disney/ESPN deal, the first OTT agreement Dish signed. The limitation is designed to make sure Sling TV doesn’t become a replacement for full-blown pay TV by preventing multiple members of a household from watching different channels at the same time (the way many TV households watch TV). This is definitely an inhibiting factor.
  • It still requires Internet service from a cable or telco provider. You have to bring your own broadband to watch Sling TV. There are an estimated 10 million U.S. broadband-only households — to which MSOs and telcos have marketed low-priced TV packages (including cheaper broadband+broadcast+HBO bundles). And they still haven’t taken the bait. Again, we’re back to the problem of pitching a pay-TV service to those who have shunned it.

Dish execs tout the supposed first-mover advantage of Sling TV (a confusingly similar name, by the way, to the Slingbox — the place-shifting devices from Dish’s corporate cousin, EchoStar). By being first out of the gate, according to the company, Sling TV can establish pricing and packaging in this yet-to-be-tapped market, ahead of OTT launches by Sony and others. But if it turns out there’s not huge demand for these services, being first is a dubious win.

There’s a maxim in the business world: You can’t cut your way to growth. Dish is betting that by cutting back the fat pay-TV bundle it can attract new customers who were previously out of reach. But in the end, Sling TV looks too lightweight to pack much of a punch.

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