Dish Looks to Turn Traditional Pay-TV Business Upside Down With New Live TV OTT Service

Sling Television is an emerging OTT service that's “completely independent from Sling Media’s line of Slingbox products and services,” the company said in a preconference news release. While the service is called Sling Television, it's not to be confused with Sling Media, which EchoStar acquired in 2007, the company said. “We believe that [Sling] will have much more credibility with the audience we’re going after, the millennials, and it had none of the baggage of Dish,” Clayton told us after the news conference: “It’s a different demographic profile.”

The Sling brand is going to have a larger role as the company advances its live OTT service offerings, executives said Monday. The company is rebranding its DishWorld service, which launched 18 months ago as an OTT offering for international video customers in the U.S., as Sling International, and it also is prepping for the launch of an OTT service called Sling Latino, Lynch said.

Sling “has always been about live television and being able to move the content wherever you want,” Clayton told us, saying he’s not concerned about confusing the two Sling businesses in consumers’ minds. Slingbox represents a small part of the EchoStar business, Clayton said. “Very few people know what Sling actually is,” he said. “We do here in the industry, but to the consumer, this will be all new. We believe it’ll be very clear to the consumer what [Sling] stands for.”

Sling TV is geared to the way millennials view video content -- on mobile devices, game consoles and streaming sticks, said Lynch. The live TV package is anchored by ESPN and Disney content, following Disney and Dish’s carriage agreement last March (see 1403050064) for OTT content.

From the outset, Dish executives have said pricing for its OTT service has to fit the model millennials' demand rather than the $90 average packages with hundreds of channels that millennials have largely shunned. Sling Television’s “breakthrough” $20/month basic package includes ABC Family, Adult Swim, CNN, Cartoon Network, Disney Channel, ESPN, ESPN2, Food Network, HGTV, Travel Channel, TBS, TNT and the “best of Internet video” from Internet content distribution company Maker Studios. Add-on packs will be available for broader content offerings by category -- kids, sports and news, for example -- for $5 per month, Dish said. Dish calls the service the “perfect complement to Netflix and Hulu.” Clayton envisions consumers subscribing to all three.

The live channels will have same the ad load as on Dish’s satellite TV content but the ads will be different, Lynch said in a pre-CES meeting with journalists in December. On satellite, commercials are “pre-ingested into the stream, encoded and sent to the set-top box,” he said. On Sling TV, ads will be dynamically inserted into ESPN and Disney channels, “which means they can be targeted,” Lynch said. Location-based targeting and other forms will be used to reach the millennial demographic, he said. Dish will have some ad space to sell, but content providers will sell the majority, he said.

Dish’s DishWorld OTT service, which brings international channels to U.S. customers, has been a beta test for Sling Television, executives said. Clayton called DishWorld a “well-kept secret” that the provider has been offering to ethnic communities for the past year and a half. Through DishWorld, Dish has built the technology and billing infrastructures and has customer service in place for OTT. “Doing Internet streaming is very complex,” said Clayton, citing technical hurdles, rights and programming issues and the technology involved with dynamic ad insertion. “We have been practicing for a long time,” Clayton said last month, and “the gun is loaded and ready to fire.”

Dish executives downplayed any concerns over cannibalizing its existing customer base with a far less expensive alternative. Clayton defined the target customers as 18-35, “well-educated” and not being penetrated by the pay-TV industry. “It’s complementary, not supplementary” to Dish’s satellite business, Clayton said.

The move to OTT is critical for Dish, which maintains it has a “flat subscriber base in an otherwise declining market,” said Lynch, who maintains the penetration of pay-TV households in the U.S. is falling faster than that of Dish. He cited millennials’ subscription habits -- paying for broadband and wireless phone but not for pay TV “nearly to the same level as the generation before” -- and said the demographic has been a target for Dish for a while.

To reach those customers, “we needed a service that met their lifestyle and their budget,” Lynch said. That includes flexibility, he said. The other content services millennials consume -- Netflix, Spotify, YouTube -- are all available on a monthly basis, without a contract, on devices they already own, he said. The services don’t require long-term contracts or credit checks, he said, so Dish has modeled Sling TV in similar fashion. Users download the app, put in a credit card number and sign up. If they want to cancel the following month, they can, said Lynch.

Programming deals around the millennial model had to be done carefully, and that took time, Lynch said. “We could have done those deals earlier but we would have ended up with $60-$70 bundles, and that’s not the way to meet that demographic.” Individuals will be able to get genre packages that meet their interests rather than buying the traditional pay-TV bundle of “big, bigger, biggest,” he said.

Sling Television will be available on smartphones, tablets, PC, Macs, Amazon Fire TV and Stick, Google Nexus, Roku devices, Roku TVs and “soon” on LG and Samsung smart TVs, Lynch said. Dish is delivering 4K Ultra HD content to a 4K Joey receiver, the first set-top box to support full 4K, said Senior Vice President-Product Management Vivek Khemka. In the past year, the necessary standards were finalized for 4K decoders, opening the door to the product that will make its 2015 debut at CES and ship in summer, said Khemka. The 4K Joey, using a dual-core Broadcom processor, supports H.265/HEVC compression at 60 frames per second with 10-bit color, excluding graphics, according to documentation.

Existing Dish customers can replace any Joey receiver in the house to receive and display 4K content on any 4K TV that supports HDMI 2.0 and HDCP, Khemka said. All 4K content will be downloaded to the Hopper hard drive via satellite and the 4K Joey can play back the content to a 4K TV using the same Multimedia over Coax Alliance connector they already use, he said. Because the 4K Joey is likely to be connected to the home’s primary TV, additional features were added including picture-in-picture and Bluetooth audio streaming, Khemka said. “You don’t need broadband, you don’t need streaming.” The 4K content is going to work like any HD content works today, said Khemka. “We will push it to the Hopper hard drive with the Dish broadcast signal.” The PIP feature will enable viewers to watch two HD channels simultaneously, he said, a feature expected to be especially popular with sports fans.

Currently, Dish pushes new release titles to subscribers’ Hopper hard drives via satellite. Movies are “just sitting there,” and consumers can decide if they want to rent them, and that process remains the same with the 4K content, he said last month. The capability exists for live 4K content when it becomes available, Khemka said, but “all the 4K content we see on the horizon is on demand studio content and TV shows.” At launch, the 4K content will download automatically to Hopper boxes, he said.

Dish also announced Internet streaming on the Hopper for the first time via Vevo, which Khemka called one of the top five destinations for music videos. The app will be available on Hooper and Joey boxes, he said, and users will be able to have Vevo in every room with a Dish receiver at no additional cost. The service is standard and high-def only, said Khemka.

Clayton referred to Dish’s 2015 goal of delivering the best video and audio experience possible to its subscribers and announced a multiroom music service that will be available to Dish subscribers at no additional charge. Controllable via app or remote control, the service is designed to be a cheaper alternative to Sonos. The Dish Music app, available for iOS and Android devices, brings independent audio capability to every room with a Joey or Hopper receiver, said Khemka. With the app, users can control and play music independently in every room, turn zones off or on and manage volume. At launch, content sources will include iHeartRadio, Pandora and TuneIn as part of the Dish service, and users will also be able to access music from their PC libraries, he said.