The Bauminator

Dishing Out Some OTT

3/05/2014 11:38 AM

After Dish Network secured coveted distribution rights from Disney that enable Charlie Ergen & Co. to offer ABC, ESPN and other networks from the media giant's stable over-the-top, the natural next question now is: how will Dish execute on them?

Dish has not announced how it intends to proceed with packaging and pricing, but Bloomberg, citing unnamed sources, reported Tuesday that the company is mulling an OTT service that would sell for $20 to $30– and that’s if Dish can salt away enough rights to create a compelling service

“We think there is a group of individuals, 18-to-34-year-olds, who would love to have a lower-cost product with some of the top content out there,” Dish chief commercial officer David Shull told the news outlet. “That’s who we’ll be targeting.”

Cheaper, smarter, perhaps more personalized bundles? Sounds like a page ripped from the Intel Media playbook that was scrapped after it was able to secure the distribution deals it needed but decided that it could not stomach the costs and questioned whether it stood a chance to hit the sizable subscriber figures stipulated by those contracts.

Intel Media would have started at zero. Dish is already in the pay-TV biz and has some scale.

Meanwhile, BTIG analyst Richard Greenfield has locked on to the idea of an OTT-delivered “personalized subscription service” that’s referenced in the Disney-Dish announcement.

Greenfield, shortening this to a “PSS,” noted in a blog (registration required) that such a service has yet to be defined, but said it opens itself up to a building-block model that could entitle a subscriber to one simultaneous stream of live or VOD programming, and charge more for a second PSS, and so on, up to an upgrade for a full-freight, traditional pay-TV package.

“The goal of the PSS would be to bring the price point of a streaming MVPD-type live and on-demand video service down to $20-$30, but limit access to only one-stream at a time. One stream at a time works great for single adults or light-TV viewers, who likely account for the bulk of MVPD churn today,” he suggested, noting that the concept is similar in some ways to the multi-faceted, multi-resolution subscription tiers that Netflix is exploring.

He also suggested that programmers might be willing to reduce their distribution fees for these personal subscriptions because getting something is better than nothing, if the latter option is having the consumer cut the cord and not take any form of an MVPD-delivered service. .

Greenfield also pointed out that some colleagues are also modeling the notion of an SD-only PSS for tablets and smartphones for $20 per month, with an HD version going for $10 more.

While the idea behind these potential models are subject to plenty of important questions, including how or if programmers will allow for some channels to be unbundled and how steep of a margin hit such services would face, the exercise at least seems to show that there's room for some flexibility to be brought to typically rigid pay-TV economic models.