Sling TV's ex-CEO is still a believer in pay TV 'skinny bundles' — but too many services are doing it wrong (DISH, P)
- TV industry figures have worried about the rise of so-called skinny bundles — bargain-priced internet-delivered multi-channel pay TV services such as Sling TV.
- Industry experts have fretted that they are unprofitable and unsustainable, because of the high and rising costs of licensing the networks included in their bundles.
- But Roger Lynch, who led the development and launch of Sling TV, said such services can actually be good business — but only if they’re designed right.
Roger Lynch may have jumped ship from Sling TV to Pandora, but he’s still bullish on the prospects of internet-delivered pay TV services — at least those like the pioneering one he helped launch.
Sling TV was the first of the so-called “skinny bundles” — the pay-TV replacements delivered over the internet that offer a fraction of the channels of traditional cable bundle but cost considerably less. Although such services have proven popular with consumers, many industry observers have fretted that they’re unprofitable and unsustainable.
But skinny bundles offer a better business opportunity that skeptics have suggested, Lynch, who spearheaded the development of Sling TV and was its CEO when it launched, told Business Insider recently.
Because such services are delivered over the internet, they offer a much better advertising opportunity than traditional pay-TV bundles, he said. Getting the rights to offer a collection of different cable channels is pricey, but recent industry-wide price hikes have made those costs easier to bear.
“I think with the price increase and the advertising business that is being developed, yeah, it sure can [be profitable]”, said Lynch, who left Sling TV to become CEO of Pandora last year.
That’s important, because there’s some worry in the industry that consumers are cancelling the traditional pay-TV bundles that are profitable for their providers in favor of skinny bundles that aren’t. Last year, the top traditional pay-TV services shed some 3 million subscribers, and they lost another 707,000 in the first quarter, according to Leichtman Research Group. Over the same time period, Sling TV and DirecTV Now gained 1.9 million subscribers.
Lynch says skinny bundles have to actually be skinny
The rise of skinny bundles doesn’t have to be a bad thing for the industry — if the skinny bundles actually make money for their providers. But to be profitable, the skinny bundles have to be designed right, Lynch said.
When Sling TV launched, it offered little more than a dozen channels and didn’t include any of the broadcast or regional sports networks. That was intentional, Lynch said.
If Sling had included the broadcast channels, Lynch said, it likely would have been forced to take their parent companies’ regional sports networks as well — Fox and NBC both operate constellations of them. And that would have been pricey.
Sling bet that it didn’t have to do that. Even before Sling TV launched, there had been a rise in the number of so-called cord cutters — people who had either cancelled their traditional cable subscriptions or had never signed up. Many of those people were choosing to watch online video services such as Netflix instead. And many were also rediscovering that they could get the broadcast channels for free, over the air.
Sling figured it could piggyback on those trends, designing its service to fit in between Netflix and over-the-air broadcast, Lynch said. The benefit was that by not including those channels, Sling was able to charge just $20 and still have money left over after paying the licensing rights for the networks it carried.
“When we launched Sling TV … there were a lot naysayers when we announced it. ‘You don’t have local channels, and everybody watches locals,'” Lynch said. “My comment to that was , ‘That’s really the point.'”
The problem with many of the other skinny bundles that have launched since — AT&T’s DirecTV Now, YouTube TV, Sony’s PlayStation Vue — is they didn’t learn that lesson, Lynch said. Instead, they launched with many more channels and generally did include the broadcast networks. That upped their licensing costs and forced them to charge more — but apparently not enough. Lynch estimates that despite charging $10 to $20 more than Sling TV, those services are losing money, because their licensing costs are even higher than what they’re charging consumers.
“The people that launched after us sort of recreated the big bundles,” he said. “They maybe charged a lower price, but it was basically the big bundle.”
But, he continued, “that’s not really where the opportunity was.”
Read the full article from it’s original source: http://uk.businessinsider.com/roger-lynch-sling-tv-pandora-skinny-bundles-2018-7