Yesterday, DISH Network Corp. (DISH) has unveiled its Internet TV service called “Sling TV” at the International Consumer Electronics Show. Technically, Internet TV is similar to cable/satellite TV services. The lone difference is that cable/satellite TV can be watched solely on television sets, while Internet TV shows can be viewed using mobile devices like tablets and smartphones.
We believe that the growing deployment of super-fast 4G LTE wireless technology and significant adoption of portable mobile devices are primary reasons behind the growing popularity of Internet TV.
The Internet TV service of DISH was earlier scheduled for a mid-2014 launch. However, management now stated that the service will go live from the first quarter of 2015. Subscribers opting for Sling TV will have to pay as low as $20 a month to view 12 Nielsen-rated sports, lifestyle and family and news networks.
Notable among these channels are ESPN and Disney Channels of The Walt Disney Co. (DIS) along with HGTV, Food Network and Travel Channel of Scripps Networks Interactive Inc. (SNI). Customers will also be able to access add-on packages for an additional $5 per month.
Over the last six years, the internal dynamics of the U.S. pay-TV industry have been gradually shifting from cable and satellite TV offerings toward fiber-based video services of large telecom operators. Moreover, the strong presence of online video streaming providers like Netflix Inc. (NFLX) is posing significant threat to the existing pay-TV business model. Meanwhile, cord-cutting has become a serious concern for major pay-TV operators.
Offering a low-cost TV limited channel service is a strategic decision by DISH aimed at checking customer churn. However, the risk is that a large part of its existing subscribers may opt for this low-priced service instead of paying for much broader but pricy satellite TV services. DISH currently has a Zacks Rank #4 (Sell).
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