Dish Network finally offered some insight into the traction of its over-the-top streaming TV service, Sling TV, in its second-quarter earnings. The company reported for the first time that Sling TV had reached 169,000 subscribers by the end of March 2015 – a figure that roughly falls in line with earlier reports of the company topping the 100,000 mark that same month. The company didn’t provide details on how many subscribers it had by end of June, though other estimates put the service at around 250,000.
Dish said that its net pay-TV subscribers – a number which, also for the first time, now includes Sling TV subscribers – fell by 81,000 in the second quarter despite the company adding 683,000 new subscribers during the April through June timeframe. Meanwhile, at the quarter’s close, Dish said it had 13.9 million pay TV subscribers, down from 14.05 million in the same period last year.
The company did beat Wall Street’s expectations by increasing its revenue and net income, with average revenue per users up to $87.91, up from $84.15 a year ago. Its Q2 revenue was up 4 percent to $3.83 billion, compared with $3.69 billion in the year-ago quarter. And net income rose 52 percent to $324 million. Its earnings per share were 70 cents, beating analysts’ estimates of 45 cents.
But what these figures mean is that even though the company is losing subscribers, Dish’s remaining customers are paying more per month for their service. This is notable given that the Sling TV streaming service is significantly cheaper at just $20 per month for the core bundle, with add-on packages that start at $5 per month. But how long will this trend continue to be the case, as more satellite TV subscribers cut the cord, or move to other services – is still unclear.
Dish lost 134,000 net satellite subscribers in Q1, and 81,000 net “pay TV’ subscribers in Q2. Sling TV may be helping Dish retain some of its customers, but it’s just as likely that its subscriber numbers are coming from those who were never before a Dish customer.
Sling TV, which launched in January, is being marketed to a new generation whose fed up with pay TV and its expensive, overstuffed bundles. To some extent, this may include cord cutters – like those leaving Dish’s satellite TV service. but it also may have some appeal to the so-called “cord-nevers” – those who never subscribed to pay TV in the first place.
For Sling TV to be competitive, and therefore for Dish to be successful in the long run, it won’t only need to capture those abandoning their satellite subscriptions, but it will also need to appeal to this second group who didn’t see the need to ever pay for TV. That’s where Dish will face challenges, as the company already has competition from streaming service heavyweights like Netflix, Amazon and Hulu, as well as niche services, HBO, Showtime and even other pay TV providers like Comcast, which are launching their own over-the-top plays.
In addition, on the satellite side of the business, competitor DirecTV merged with AT&T, and is providing bundled service. Dish does not offer that option.
The company noted, though, that Sling TV customers are less expensive to acquire, because there’s no customer hardware involved as with its satellite TV service. With Sling TV, users simply stream live TV to their PCs, mobile phones, tablets, or streaming TV players, like Roku.