As Millennials increasingly move to OTT (over-the-top) services, pay-TV companies like Dish Network (DISH) are also focusing on OTT services. Dish Network’s OTT offering is Sling TV.
Recently, Dish Network revamped its Sling TV service. In June 2016, Dish Network unveiled two packages for Sling TV: Sling Orange and Sling Blue. Sling Orange is a basic single-screen package priced at $20, and Sling Blue is a multi-screen package priced at $25 per month. Sling TV subscribers can buy both Sling Orange and Blue for $40 per month.
Hulu is also set to launch its online television service later this year. As the above chart shows, Dish’s Sling TV service is priced at $20 per month—which is less than the proposed price for Hulu’s online television service.
Intense competition in the OTT space
However, competition is intensifying for Dish’s Sling TV. According to a Wall Street Journal report from October 19, Alphabet (GOOG) had signed up CBS (CBS) to carry the network on YouTube’s online television service that is likely to debut early next year. According to the report, the new service will be called Unplugged and, citing “media executives,” is likely to be priced between $25 and $40 per month.
This rising trend of new entrants in the OTT space priced competitively could result in Dish being forced to modify its Sling TV packages, which could affect the company’s margins.
However, Dish noted earlier that it hasn’t observed any cannibalization of Dish’s pay-TV subscriber base by its Sling TV service. According to Dish, the customer base is different for both these services. Dish added that it believed that its Sling TV service offers it an opportunity to enter new markets where it’s not physically possible for the company to install a satellite dish.