The cost to acquire new subscribers
Dish Network (DISH) incurs significant upfront costs to gain subscribers. The company bears costs such as advertising, marketing expenses, equipment, installation services, and new customer promotions to acquire new customers.
Dish Network incurs significant costs to retain its existing Dish TV customers. On the other hand, subscriber acquisition costs are much lower for Dish’s subscribers of its Sling TV, which offers Internet streaming services.
Declining subscriber acquisition costs
As can be seen in the chart above, Dish Network has been facing a decline in subscriber acquisition costs (or SAC) since 2013. A decline in subscriber acquisition cost is primarily attributable to the decline in gross new Dish TV subscriber activations and a decrease in Dish TV SAC.
The company has been facing a drastic decline in Dish TV subscribers due to the growing popularity and availability of various online streaming options. In addition to Dish Network, the other pay-TV companies are also battling to retain their customers amid the cord-cutting wave. In 2017, Dish lost about 1.2 million satellite television subscribers, but it added about 711,000 customers to its Sling TV service.
Increasing demand for low-cost video streaming services from Netflix (NFLX) and Amazon Prime Video (AMZN) has attracted a young urban population. Companies like PlayStation Vue (SNE) and FuboTV have also entered the market with their own streaming services.
Tech giants Apple and Facebook (FB) have started streaming services, adding to the competition in the over-the-top space.