Reviving The Internet TV Trend; A Huge Challenge to Traditional Pay TV
The top headline above deals with video services and in-home consumer devices.
Yet, someone young and new to the media and telecom industries might easily confuse this title with groups and music stars among their youthful music and entertainment. Indeed, “Sling and The Disruptors” could well be an established band of record, but wait, some new talent — in the form of star new performers Roamio (he of Latin origins), TabletTV (it of fundamental home-like origins), and “Griddle” (it, too, of rather humble in-home kitchen-type origins) — are about to come in and shake up the melody and lyrics status quo.
In short, each of these video providers is a disruptor because it turned (or turns) the traditional pay TV-broadcast model on its ear, and/or it specifically caused (or causes) people to realize they don’t need to have pay TV any more, at all!
So stand back, world, the video and entertainment industries as you knew them pre-2015, are in for a massive 2015 and 2016 shake up! The new things you are about to see and hear from this newer and more amazing band of rebels (including the recent infusions), will truly amaze (and confuse).
Sling and The Disruptors
Dish Network’s chairman, Charlie Ergen, knows innovation, indeed, without too much hyperbole, one might say he’s proven it’s a core part of his DNA. Yet, Ergen is not always instantly successful in his innovation and investments (witness early efforts in Blockbuster, Wild Blue, Lightsquared and Sprint). That said, in Sling, Mr. Ergen discovered one of media’s crown jewels. Thus far, Sling has almost entirely avoided the legal and regulatory arrows of the broadcasters and government, while all along gathering an amazing (yet small) cadre of incredibly loyal subscribers, who take the Sling’s “my content exactly as I see it on my Dish service” everywhere they go.
Unfortunately, Sling, like similar EchoStar hardware products seeking non-Dish pay TV viewers (especially cable ones), has been challenged when it comes to developing its potential subscriber pool. Nonetheless, Sling is the first real application/service/device to take the TV viewer away from the traditional way of delivering that content, and as such, it has the industry’s admiration (and consternation).
Indeed, Comcast and others have been heard to have sought to replicate the Sling-type service, realizing its core functionality and viewer attraction. All of the local and other content (including that stored in the DVR), accessible and viewable via the Internet anywhere else in the world, assuming you as a DISH Network subscriber can get an Internet signal…well, that is disruptive (and were it not for the fact that content providers still get their share of the Dish Network subscriber fee, and more local ads get delivered to on-the-road Dish Network subscribers via Sling, I’m guessing by now more than just Fox would have sued Sling for copyright infringement and/or breach of contract).
But not so fast. The almost-a-decade-old Sling product has now, within a matter the a past few years, been faced with some fascinating new challengers, i.e., “challengers” at least from a stand point of new forms of delivery and distribution of video content.
And unlike Sling (which would tend to make people want more to subscribe to and stay with the Dish Network pay TV service), these three newer systems described below tend clearly to cause that dreaded TV word for pay TV providers: “Cannibalization” (of the existing pay TV subscriber base)!
Following Sling on the TV timeline, but unveiled years later (i.e., Roamio OTA was announced in 2014), TiVo’s new set-top box costs $50 for its base model, with a monthly fee of about $15. In return, TiVo helps deliver a hard drive with broadcast over-the-air accessibility (thus the acronym in the name, OTA).
Roamio is a clear disruptor because it functions to cut the pay TV cord, by becoming a viable video alternative. For less than many subscribers pay out in the form of 2-3 monthly pay TV invoices, Roamiodelivers a year of service and the box (which presumably will last a minimum of years and perhaps even decades). Plus, one gets the remarkable TiVo software, in the form of the TiVo User Interface (UI), which most users still say leads the pack in the global UI race.
Roamio is one of those go-to new choices for subscribers who want to leave the costly and inflexible pay TV bundle, perhaps forever, yet still have access to a quality DVR, and still have access to the most popular content, which is typically OTA broadcast. Mid-sized to smaller cable operators are expected in the years ahead to be big supporters and proponents of Roamio. Indeed, many of these small-to-midsized cable operators like Cable One are dropping core traditional content creators, like Viacom, and instead only providing broadcast and Internet services (leaving the core pay TV channels and content services completely out of the mix).
TabletV was announced during the holiday 2014 season. It is a remarkable, long overdue, and even surprising collaboration, reaching into streaming services by a broadcaster. Broadcast group owner Granite Broadcasting, out of New York City, is a core investor in TabletTV.
TabletTV will also disrupt traditional pay TV services, especially because it is subscription free, after a one-time hardware fee of $89.95. That $89.95 gets San Francisco, Bay Area users a hardware piece called the T-Pod, which converts local broadcast signals into Wi-Fi, for display typically on a table device, such as an iPad. The T-Pod is a hand-sized digital TV antenna, tuner, and digital recorder. Later iterations of the TabletTV service are expected to move geographically well beyond the SFO area, and well beyond just the iPad and its iOS operating system. Android and other cities are expected later this year.
That said, however, TableTV will gain traction also because it is aimed at the device side of the industry, which thus far has been rather lean on acquiring and thus providing accessibility to traditional broadcast signals.
And like Sling, TableTV will not only create a new source for people to watch broadcast TV (even if they retain thir pay TV subscriptions); plus, it will inevitably give more choices to those labeled “cord-nevers,” who just wouldn’t ever buy pay TV bundles as they stand today; and TabletTV will inevitably create more “cord-cutters” from those who try TabletTV and decide it is all they need.
Charlie Ergen has announced for some time now that he and one or both of his two companies will participate in the development and implementation of a new OTT Internet video service, aimed at mobile devices. Mr. Ergen has also said this new OTT product is coming with Disney and ESPN as part of the core package, and it is expected to be announced soon, perhaps as soon as early next week at CES.
Although Dish for many reasons would like it otherwise, similar to two of three of these other services mentioned above, the new Dish OTT service will hurt its traditional pay TV Dish Network business.
Ultimately, the stated goal may be to avoid cannibalizing the existing base of 14 mil. DISH Network subscribers. But for those taking the new service, they will either not then take any pay TV service at all, or they will be only watching the new streaming service at given times (and thus not watching their pay TV service at the same time). Either way, Dish Network’s pay TV is not being utilized, and it will be a struggle to maintain both of Dish Network’s subscriber and advertising bases. Other pay TV services like Comcast, DirecTV, Charter, and Cox need also take accurate note.
It’s critical here, however, to remember that Charlie Ergen isn’t in the program creation business. Rather he distributes video globally, and this new streaming service suggests he’s merely finding another platform for that video distribution business.
Charlie Ergen is like a well-established, well-respected, livery stable man, 115 years ago, who sees the onset of the automobile, and rather than sticking with horse travel forever, he adds a new and better form of what he does: provide transportation. Indeed, Mr. Ergen doesn’t always want to move to compete in that new world, but if he looks at what he really does, he must. Be it horses-to-autos, or traditional-pay-TV-to-steaming-video-delivery, Charlie Ergen is in a position to embrace that innovation, and he will. At this point, as consumers, we are all pretty fortunate for that.
As to why I called the new, unnamed service “Griddle”? In order to avoid confusing people, the new Dish affiliated service must be different enough from existing brands, yet new, and something that ties it in with and burnishes the DISH brand. What better than a clever new name, say, for example, “Griddle,” which connotes something good, and is “hot,” and ties in with other popular items in a kitchen, like the “Dish”? Thus, the “Griddle”?
2015 and 2016 are the years of reckoning for the traditional pay TV industry. As cable was forced to in the late 1990s with the Direct Broadcast Service (DBS) newcomer, the next two years will be make or break for many traditional stakeholders, for sure, but also for many would-be new comers. Either way, to survive, each stakeholder in each set has to get it right, and in a relatively short time.
Sling, Roamio, TableTV, and “Griddle”…these are just three-four players on the new media side that are first to get there. And Dish Network is the first on the traditional pay TV side to start getting there.
Video, Pay TV, Broadcast, and OTT Innovation…1,2,3…here we come!