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Sling TV: Not Just for Cord-Cutters

CEO Roger Lynch Talks About Other Consumer Targets, Filling the Broadcast TV Gap 5/04/2015 8:00 AM Eastern

FOLLOWING A BRIEF BETA PERIOD, Sling TV’s over-the-top pay TV service went nationwide on Feb. 9, streaming out a core service for $20 per month and a new twist on the bundle taking the form of $5 add-on packs. It’s been tweaking the service ever since, adding new packages, expanding its base live TV lineup, and adding premium services such as Epix and HBO.

 

There have been some technical hiccups in the early going, though, as the service faced streaming stress tests when consumers flocked to watch the NCAA Men’s Basketball Championship and signed up for HBO prior to the season five premiere of Game of Thrones.

 

Next TV editor Jeff Baumgartner recently caught up with Sling TV CEO Roger Lynch to discuss some lessons learned so far and what’s on the horizon for the OTT service.

 

NTV: Sling TV has been available on a national basis for more than two months. What are some of the big lessons you’ve learned so far?

 

Roger Lynch: I’d say the first one is that there’s strong demand for our product. We’re pretty encouraged by that. The second one is that, because it’s an impulse purchase or can be an impulse purchase, especially around big tentpole events, you can get extreme levels of people all joining the service at the same time. And that was expected, but probably a little more concentrated than we expected.

 

NTV: What is the typical profile for a Sling TV subscriber? Is it the cord-cutter/cord-never group, or something more?

 

RL: There are three categories that we had hypothesized we would get, and what we are seeing first is cord-nevers, who tend to be millennials, and the second category is cord-cutters, most of whom have already cut the cord. There’s actually been a lot of cord-cutting over the last three or four years, but it’s been masked by overall pay TV numbers because there’s been strong household formation in the U.S. There’s probably about 4 million people who have cut the cord over the past four to five years. And there are some people who may be cutting the cord now that take our service, but the majority is people who cut the cord two years ago and they really miss ESPN or Food Network or AMC.

 

The final category is what we call supplementers. These are people who have traditional pay TV and buy our service on top of it, which may seem a little counterintuitive. But it was always our expectation that there would be some people who would do that, maybe for the added utility of having a mobile service or maybe they are taking fewer channels from the pay TV provider or maybe they travel a lot.

 

NTV: Are supplementers the smallest group of the three so far?

 

RL: That would be the smallest group, but it’s a meaningful group.

 

NTV: How are you marketing this service to consumers and what’s been the most effective tactic so far?

 

RL: We haven’t done that much marketing yet. We’ve gotten a lot of attention from media, on social media and word of mouth. The marketing we have done is mostly digital, social and mobile. Frankly, we’ve had such encouraging results without having to spend much money.

 

NTV: What has the retention rate been once someone registers and signs up for a week of free service? Are they sticking with it?

 

RL: We’ve been pleased with the results. We had our expectations to what that would be and we have some experience with these free trials from the [Sling International] service. The conversion — what we call roll-to-pay — from the trials has been very strong for us.

 

NTV: Has that rate been better than expected?

 

RL: I guess I thought initially that as we got so many sign-ups from the press that was being done, that maybe we’d have a lower roll-to-pay than we were expecting, because it could just be people saying, ‘I just read about it so I should go try it out.’ But we didn’t see that. It’s been a pretty strong conversion rate.

 

NTV: Once customers take the core $20 per month service, how many are also taking one of Sling TV’s add-on packages?

 

RL: When we first launched the service, we weren’t sure how many add-on packs we would have. The sports add-on pack was going to take another month or two to launch, but ESPN was able to get [launched] quicker than expected. We hadn’t really promoted the add-on packs as much as we intended to. But even despite that, it’s been strong uptake of those add-on packs. Now we have HBO; that’s another one that people are signing up for.

 

NTV: What have the results been with HBO so far?

 

RL: I won’t talk specifics about it, but I will say that what we saw strong uptake of our existing customers and strong uptake of new customers joining our service to take HBO.

 

NTV: Now we have Verizon launching add-on packs and skinnier bundles. What do you think about that? It sounds a little bit like your model.

 

RL: It does. I’m surprised it’s taken the industry this long to realize that this is a more consumer-friendly way to offer content. At a company I used to run over in the U.K. [Video Networks International, an IPTV company] about 12 years ago, we were doing add-on packs. It’s a more consumer friendly way to offer content.

 

NTV: You’re also enticing some customers to stay on for at least three months using device bundles with Roku and Amazon. How has that program performed?

 

RL: That’s not something new for us, because we’ve been doing it with DishWorld. The reason we started doing that with DishWorld and why we’re doing it today is the same — although streaming devices are very popular, not everyone has one yet. We wanted to make it simple to actually sign up and get the service. Almost everyone has a phone and a laptop and maybe an iPad, so they can start to watch on [those devices], and we’ll send you one of those [Roku or Amazon] devices if you prepaid for the three months.

 

It’s a pretty popular offer. It’s not the majority of subscribers, but a pretty significant portion take it.

 

NTV: Speaking of popularity, broadcast TV remains of interest to consumers. Is there any interest in integrating Sling TV with an over-the-air capability, whether that’s by bundling in antennas or running your app on devices such as TiVo’s new Roamio OTA device?

 

RL: Frankly, one of the reasons why we didn’t put locals in our package is because we know that increasingly the demographic we’re going after, they’re getting [channels] over-the-air. They already know how to do that. It’s a great combination — getting locals over-the-air with Sling TV.

 

We also plan, and have announced deals with ABC and Univision, to be able to offer locals in a broadcast tier that people could add on if they choose to, but not require them to.

 

And for your question about devices, we’re going to continue to expand our device footprint. We’ll focus on the devices that people want to consume our content on. Some of those could be OTA devices, and some of them will be streaming devices.

 

NTV: Prior to launching HBO, Sling TV made some enhancements to deal with spikes in demand by balancing the load on the servers. Can you provide more detail on what was done there?

 

RL: It’s just a conflict of a bunch of new customers signing up all at the same time as existing customers trying to use the service. On servers that authorize customers to be able use the service, we had to balance the load across those servers. Across our content delivery network partners, we also found that we had to move some of the traffic from one partner to another partner to balance that out better.

 

NTV: Sling TV is currently a single-stream service, though HBO subscribers can access multiple streams of HBO content. Is there any interest in offering a multi-stream version of Sling TV and adjust the pricing?

 

RL: No, nothing at the moment. Our basic package is a single-stream service and our HBO add-on is a three-stream service.

 

NTV: You’ve been adding to and tweaking the offering since it was launched. Is there anything else we should expect to see later this year in terms of new features and packages?

 

RL: We’ve been adding new channels and new devices and some new functionality like parental control. Our plan will be to continue to do more of that. You’ll see more content, you’ll see more devices that we roll out on and more features in the current product itself.

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