Netflix CEO: Sling TV ‘attractive’ at $20, as Internet TV goes mainstream

Does Dish’s Sling TV, the $20 a month “Millennial Catcher” announced at CES this month, have a future? Netflix CEO Reed Hastings thinks so.

Asked a question during Netflix’s earnings presentation Tuesday about the service, which has already reportedly debuted for some Dish World subscribers, Hastings said he didn’t believe it would have an impact on Netflix’s business, but he did say it was “a great start.”

“Charlie Ergen has been a great entrepreneur and I think he sees the future that it’s Internet centric,” he said. “It may not be the perfect offering today, but it’s got, at $20 a month, very attractive pricing.

“It’s great for him and adds some competition in that market.”

That’s a different tune than many observers had after Dish announced the product at CES.

Some said it didn’t offer enough to be attractive.

It had “only” ESPN and ESPN2. It had none of the Big 4 networks. It had no FX, AMC and just didn’t have enough content to attract Millennials.

It was launching with no DVR and only enabled three days of catch up TV.

And, of course, subscribers only got a single stream.

Is that worth $20? I think so.

And, I think Hastings nailed it when he called Sling TV “a great start,” because that’s what it is.

Sling TV is a stake in the ground, the first of its kind. And, it sets a course for others – and there will be many – to follow.

The product is not aimed at giving all the users all the TV they want, it’s an alternative. And it will appeal to a segment of the audience that’s more at risk than many in the industry are willing to acknowledge.


Millennials who live on their devices; who are less likely to watch any game, but won’t miss the “big” game; who don’t generally discriminate as to which screen is their first screen… it’s whichever screen is on… and that has what they want to watch.

It’s no coincidence that Millennials are the heaviest users of Netflix, that they are, percentagewise, the largest group of subscribers.

Most of the criticism in the popular – and industry press – came from Baby Boomers. Guess what folks, Millennials don’t watch, or want to watch, TV the way we (yes, I’m a Boomer, too) want to. They have their own style.

There’s a fair amount of research out there that says Millennials have no problem watching long form video on their mobile devices, nor do they appear to be slaves to appointment TV; they’re fine with catching up to “The Big Band Theory” a week late and – without question – can get to a site that has the newest episode of “The Walking Dead” or “Game of Thrones” if they want to badly enough. But, I suspect they’ll be willing to pay the tariff, whatever it is, for HBO Go and add that to their Sling TV experience without worrying too much. And, if CBS really is a must-have, that’s just $6. Boom. Live linear.

A lot of conversations over the past several months also have focused on the potential expense of a user only buying the content they wanted, a la carte, if you’d like.

Virtually every one of them includes the cost of an Internet connection as the straw that breaks the Millennial’s back.

Please. They’re going to have a broadband connection, whether they want OTT or not. It’s just as much a part of them as their smartphones.

So, Sling TV, Netflix, CBS, HBO, hell, throw in Amazon Prime, and my monthly bill comes to $58… that’s $65 less than NPD estimated – in 2012 – the average monthly cable bill would be in 2015.

Sling TV – or any virtual TV offering, for that matter – also helps deal with one of the biggest issues facing pay-TV operators: Churn.

Subscriber acquisition costs (SAC) are astronomical. In Q3 2014, for example, DirecTV said it spent $980 million on SAC and another $398 million on upgrade and retention. For the first nine months of the year, that’s $2.7 billion and $$1.1 billion respectively. And, as competition intensifies, those costs go up.

What are SACs? Operators have to advertise, make special deals for new service, and – usually – pay for the install (and throw in a couple of months of free premium channels), just to be competitive.

And one of the biggest problems is that the United States is one of th most mobile populations in the world. Gallup said 24% of Americans said they moved to a new residence in the past five years. For a service provider, that’s – almost always — a lost customer.

But for Dish’s Sling TV and any other virtual MSO? It’s an opportunity.

And that’s a big deal.

With broadband becoming ubiquitous in the U.S., and with Net Neutrality appearing to be on the inside track with the Federal Communications Commission, it’s a safe bet that more content owners and service providers will look to anchor a place on the Internet.

Internet TV, after all, as Hastings said, “is becoming so mainstream.”

And it’s a current that you need to follow, not fight.

Stay tuned.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn