LAS VEGAS — Dish Network unveiled a significantly lower price for TV service on Monday to appeal to those who abandoned or never paid for TV.
For $20 a month, Sling TV users will get ESPN, Disney Channel, Food Network and nine other channels.
The catch? You’ll still need a reliable Internet connection.
Sling TV, available to subscribers later this month, isn’t meant to be a direct competitor to Dish’s satellite-TV service or on-demand streaming services such as Net flix. Rather, it offers 12 live channels streamed to mobile devices for about the same price Comcast charges to add HBO to an existing plan.
After years of consumers griping about rising prices for too many channels they don’t watch, Dish’s Sling TV is a game-changer — one that will force competitors like Comcast and DirecTV to respond with their own services or face losing customers who are fleeing for modern options.
With average pay-TV bills at $64 a month, Sling TV’s lower price is a significant pressure.
“This is a really big deal. It’s something that many larger companies and media companies have not been able to accomplish,” said Rick Doherty, research director with Envisioneering Group, a market-research consultant in New York. “Sony’s been putting packages like this together for 15 years, but it seems to be double the price. What they’re doing at Dish and Sony, the cable industry is going to have to respond. In the end, consumers will have more choice.”
HBO, CBS and others have already bypassed pay-TV providers and are selling streaming service directly to the consumer. Sony is rumored to be working on its own service. And DirecTV made a similar streaming agreement with Disney last month.
Pay-TV providers have been struggling for years to maintain subscribers. Douglas County-based Dish lost 12,000 TV customers in the third quarter of 2014. According to market researcher Leichtman Research Group, the cable- and satellite-TV industry lost nearly 500,000 customers in the same quarter.
So, a few years ago, Dish began rethinking the entire market.
“Millennials are not choosing to pay for TV,” said Roger Lynch, who joined Dish five years ago and is now Sling TV’s CEO. “Why? They have alternatives. Piracy, Internet. There are other ways for them to watch. But if you look at the models they are subscribing to, it’s affordable and I can take it with me.”
Cable and satellite TV providers offer hundreds of channels to consumers, some more popular than others. But the industry has shied away from allowing consumers to pick and choose which channels they actually want to pay for. The argument is that high quality but less popular channels need to be subsidized. And since every channel negotiates carriage fees, or how much a company like Dish must pay per subscriber, pay-TV prices continue to rise.
When Dish dreamed up Sling TV, Lynch said they didn’t want to force customers to pay for unwanted channels. And they didn’t want to just offer TV on the Internet.
The first live test came in April 2013 with the launch of DishWorld, a streaming plan of international channels. That plan will be renamed Sling International, the company said Monday as it announced Sling TV at the Consumer Electronics Show in Las Vegas.
Dish found that existing international satellite-TV subscribers didn’t cancel their service and switch to streaming only. In fact, customers new to Dish also signed up for the streaming service.
“Dish wasn’t the competition,” Lynch said. “That was our hope and what we hope for with our (Sling TV) service.”
Dish plans to follow the same model and will go after non-Dish customers for Sling TV. The Sling TV business unit has a separate engineering staff, call center and management. The Dish name won’t even be part of any marketing.
“Our target market is rejecting pay TV,” Lynch said. “So we won’t be a Dish brand so people won’t associate us with traditional TV.”
The basic plan includes 12 channels for $20 a month. No major network broadcast channels, like CBS and Fox, are included since Dish feels users can get those over the air for free already.
But like traditional pay TV, Sling plans to offer additional tiers — for kids, news and sports — for $5 extra per tier. Customers must subscribe to the basic plan to get the other tiers.
“This is an answer to a need,” said Jimmy Schaeffler, chairman of The Carmel Group, a consulting firm. “It’s not the perfect answer, but it’s an important step forward for Dish and the industry.”
But Schaeffler believes Dish TV customers and other pay-TV subscribers will bolt.
“This is going to cannibalize existing pay TV, period,” Schaeffler said.
He also pointed out Dish is the first among the major pay-TV providers to offer such a plan. But not the last. And Dish, like its pay-TV service, will have to renegotiate contracts with the channels and could face higher fees — the bane of Dish’s existence.
But Schaeffler and Doherty say if anyone can do this, it’s Dish Network founder and chairman Charlie Ergen.
“Charlie knows the odds of the game,” Doherty said, “and in this case, he’s not losing money.”
Tamara Chuang: 303-954-1209, firstname.lastname@example.org or twitter.com/Gadgetress
A brief history of subscription-based streaming tv
June 29, 2010 — Hulu previews Hulu Plus, which provides a greater variety of streaming shows and movies for $9.99 a month. Commercials are still included. Drops price to $7.99 when Plus launches officially five months later.
Nov. 22, 2010 — Netflix begins offering a streaming-only subscription service for $7.99 per month.
Feb. 22, 2011 — Amazon opens a limited number of TV shows and movies from its on-demand streaming service to Amazon Prime customers for free. Customers must pay $79 a year for the membership. (Prime today costs $99 a year.)
September 2014 — Hallmark’s streaming video-on-demand service is renamed ” Feeln.” Hallmark charges $4.99 per month.
Oct. 15, 2014 — HBO says it will begin streaming shows online in 2015 to reach “80 million homes that do not have HBO, and we will use all means at our disposal to go after them,” Richard Plepler, HBO’s CEO, said.
Oct. 16, 2014 — CBS launches CBS All Access for $5.99 per month. Subscribers get a mix of CBS shows a day after the original episode airs, plus live-streaming from local channels. slingtv differentiations
Sling TV is definitely a departure from traditional TV. For one, the major networks aren’t included to keep costs down.
• Sling TV is live TV — commercials included! Commercials will be different from regular satellite-TV service and can be targeted.
• The service will offer some video-on-demand content.
• 12 channels are in the basic plan: ESPN, ESPN2, Disney Channel, ABC Family, Food Network, HGTV, Travel Channel, TNT, CNN, TBS, Cartoon Network and Adult Swim.
• Special tiers — like kids, news and sports — will be available for an additional $5, but customers must subscribe to the basic $20 plan.
• Sign up with a credit card to start viewing immediately on a computer, a mobile app for tablets or smartphones or on devices like a Roku box or Amazon Fire TV that hook up to a big TV.
• There are no contracts, credit checks or cancellation fees.
• No DVR so you can’t record shows. However, some shows will be available on demand so customers can watch those episodes from the beginning.
• Sling TV is not related to Slingbox, an EchoStar device that allows consumers to watch their home TV and its recorded content even if they are far from home. Echo Star spun off Dish Network in 2008.