EchoStar’s $380 million purchase of Sling Media once again raises the question of whether a consumer TV-device company can exist as a standalone entity. History has not been kind to such companies trying to break out from the startup field. Akimbo anyone? TiVo has also certainly seen its share of ups and downs (mostly downs). Even the attempts of larger tech companies at combining TVs and computers, such as the Apple TV or Microsoft’s various efforts over the years, haven’t fared any better at gaining massive consumer acceptance. The consumer-electronics giants and cable companies simply dominate this market. Given that reality, selling to EchoStar may have been Sling Media’s best option.
Although the company does not disclose exact figures, a Sling Media spokesperson says the startup has sold “hundreds of thousands” of Slingboxes over the past couple years. So that could be anywhere between 200,000 Slingbox users (which would bring the purchase price to $1,900 per user) and 900,000 (which would come to a purchase price of $422 per user). (Ed. note: I fixed my initial bad math).
Still, that is not the math EchoStar used to justify the purchase. Because EchoStar, which was already a minority investor in the startup, did not buy Sling Media for its puny number of existing customers. It bought Sling Media for its place-shifting technology, which allows people to watch whatever is on their TV from a remote location on their laptop. EchoStar can now integrate that technology into its set-top boxes and has a better chance than Sling Media did to get the number of Slingbox users up well past a million. Another reason behind the deal may be to combine Sling Media with EchoStar’s other technology assets (set-top boxes, satellites), and split off the resulting, strengthened TV-technology group as a separate business, while dressing up its TV subscription service for a sale to AT&T. If that happens, then an independent EchoStar TV technology business would be free to sell place-shifting set-top boxes to rivals as well.
Just as the DVR did not take off until DirecTV and EchoStar started pushing the technology to their own customers, I would expect the same thing to happen with Slingboxes. But instead of EchoStar trying to design an inferior version of a Slingbox and push that on its TV subscribers, as it’s done with DVRs, at least this time it is starting out with the best technology up-front.