M&E Daily

Dish Chairman: OTT Space Facing Challenges, But Opportunities Remain

The over-the-top (OTT) streaming video service sector that includes Dish Network’s Sling TV is facing some challenges, but there are still opportunities for success with it if companies are able to provide consumers with the right mix of content, according to Dish chairman Charlie Ergen.

“It depends on how we as an industry pack it,” Ergen said Nov. 7 on an earnings call for Dish’s third quarter (ended Sept. 30), after being asked what the future of OTT is and whether it may have peaked already.

He added: “OTT has a lot of potential. But you’ve got to give customers what they want.” One factor that makes things even more challenging is that OTT is “much more prone to piracy” – including subscribers sharing passwords with multiple people — than linear TV, he noted, telling analysts: “A lot of the programmers” stream content and “don’t realize” that many people “under the age of 40 know how to pirate stuff and never paid for TV in their life.” Dish is “one of the few companies that actually has a full-time staff to attack piracy,” he said.

Viewers also “don’t like commercials” and “they like binge viewing” of entire TV series, “but yet no OTT provider is really able to do that in an efficient manner today because contractually we’re not really allowed to,” he said. At the same time, people continue to view a declining amount of traditional linear TV and keep turning, in increasing numbers, to Netflix, he noted.

He added: “There has to be a fundamental shift on the thinking of the linear programmers and I’m hopeful that that process has started, and some people are thinking about a different way. Certainly Disney is thinking about a different way and I think their” Disney-branded direct-to-consumer streaming service “will look different than their linear product, and hopefully some other people will try that as well.”

If that doesn’t happen, he warned, OTT “will sputter out and not [have] a huge impact” on the market going forward. If that transformation does happen and it’s “done correctly, OTT will be a big factor — it’ll be as big a factor as cable or satellite have been to the business,” he predicted, adding: “We have to go through some evolutionary changes to do it. And our philosophy has been, to the extent that content owners want to work to try to achieve some of those things, we’re willing to work with them.”

Regardless, he said: “I don’t think [OTT] sputtered as much as many people are writing because I don’t know that everybody” running an OTT service even “releases their numbers. So, there may be some growth that we’re not seeing with some of the other players.”

Dish reported that, in Q3, Sling TV subscribers grew by about 26,000 people. But that was significantly down from the 41,000 subscribers added in Q2 and 91,000 added in Q1 this year. The company didn’t break out Sling TV from its total
subscriber numbers in Q3 last year.

Early this year, Dish said it ended 2017 with more than 2.2 million Sling TV members, marking the first time the company provided the number of subscribers that its “skinny” TV bundle had attracted.

Net Dish TV subscribers, meanwhile, declined by about 367,000 people in Q3, while Dish TV’s average monthly subscriber churn rate was 2.11% versus 1.82% a year ago, the company said.