Slinging Away From the Pack

Why This MattersSling TV says its a la carte approach to channel pricing and packaging gives it an edge among vMVPDs.

When Sling TV streamed onto the scene in February 2015, it was all alone, the first virtual multichannel video programming distributor to deliver a subscription package of live-TV channels that initially targeted cord-cutters and cord-nevers.

Fast-forward to today, and Sling TV's got lots of company amid the launches of OTT rivals that include PlayStation Vue, YouTube TV, fuboTV, Hulu Live, DirecTV Now and likely more to come.

Though Dish Network no longer breaks out Sling TV subscribers, the OTT service remains in the lead among its peers. According to comScore, there were 3.1 million U.S. homes taking a skinny bundle as of April 2017, with more than 2 million on board with Sling TV.

So the challenge now is how to retain and perhaps extend that lead in an increasingly crowded market of vMVPDs.

Roger Lynch, Sling TV's CEO, believes that his company's a la carte style of packaging will help it stand apart from the pack. B&C contributing editor Jeff Baumgartner recently caught up with Lynch to reflect on what's happened in the last 18 months and what else Sling TV has in store. An edited transcript follows.

Sling TV was the first virtual MVPD out of the gate when you launched in February 2015. What are the biggest lessons you've learned?

Even before that, we had almost three years of experience with the international channels with DishWorld [rebranded as Sling International in 2015]. There were a lot of lessons learned, certainly on the technology side.

For the Game of Thrones [season seven] premiere on Sunday [July 16], we saw that a number of services melted down, some that have fewer subscribers than we have, and we had a great premiere for it. But when I go back two-and-a-half years ago, we had a problem with the Game of Thrones premiere. I think that's evidence of a lesson learned. We've learned how to create a more stable and scalable service.

Two, I think back to when we launched, there was a big question in all of our minds: How big is the market opportunity? Were consumers really ready to go to live streaming? It was not obvious to consumers. It was very novel to stream a live television package. I think we caught people by surprise. I think that question has been answered pretty emphatically with the demand.

With respect to scalability and stability, what has changed to help you essentially cruise through the recent Game of Thrones season premiere?

I'm not claiming that we're perfect. We still have things that come up from time to time. But we are hitting all of our metrics - customer satisfaction, net promoter score, churn, everything. We've seen a dramatic improvement in our service.

But you build it and you test it and it goes into the real world and you find things that you thought could handle a certain amount of volume and it can't. With live streaming, there's a lot of third parties that you rely on. It's not like our [Dish Network] satellite system, where you build the satellite and you control the satellite and you control the set-top box and you have the spectrum - you have control of the end-to-end. You don't in a live-streaming service.

Part of it is that you run over the open internet and part of it is you have to rely on a lot of third parties that are integral to your system. You also find that some of them have weaknesses in their architecture and they have to be sorted out. As we look back the issues that we've had, probably half of them have been our own doing, and half of them have been third-party vendors that we work with.

From a demographic standpoint, how is your customer base breaking down compared to the early launch days and how has that changed in the last year or so?

That's actually played out pretty much how we thought it would. When we launched, we would attract early adopters, which would include cord-nevers and some cord-cutters. When you look at your target market, it doesn't mean you don't go after customers outside of that; it means you focus your efforts on that strategic target market.

At launch, it was basically males who were 25-35. They tend more likely to be early adopters and they overindex in sports, and we have a lot of sports. When we launched it was about two-thirds, and maybe it was about 70%, male.

Over time, we started to see that the percentage of males started dropping somewhat. It was still a significant majority. As we started to add more content, [we'd get more] young families with kids. And once we started to have more serious competition launching, I think that opened the market for a different kind of category of customer, which is customers who are pay TV customers who are leaving pay TV to take an OTT service.

We weren't seeing many customers beforehand who wanted that many of the add-ons, so we came out with that offer where you get the Lifestyle, Comedy, Kids and News Extras, which are $5 each and would be $20 when you put them all together, but you can get all four of those for $10 [with the promotion]. That has proven to be very popular.

You still lead with the Blue [$25 per month, which includes Fox and NBC locals and Fox and NBC regional sports nets in select markets] and Orange [$20 per month, with no local broadcast TV or regional sports nets] core packages. Do most of your customers take some sort of an add-on package?

The take rates continue to grow and grow and grow, partly because the four extras offer a really good deal. That's core to our strategy of making our service a la carte, when you can choose. If you look at our packaging versus traditional pay TV - traditional pay TV has the big, bigger, biggest bundle. And they all, as we say in the industry, nest within each other - every chann

LINK:	http://www.broadcastingcable.com/news/next-tv/slinging-away-pack/16737...
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