Dish Network’s new long-term carriage deal with The Walt Disney Company include coveted, expanded streaming rights that will enable the satellite TV giant to offer subscription services over the top.
As explained in the release issued Monday night, the “extensive and expanded distribution agreement grants DISH rights to stream cleared linear and video-on-demand content from the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of an Internet delivered, IP-based multichannel offering.”
A Dish spokesman said the terms of the new deal would give Dish the rights to apply those distribution rights toward a so-called “virtual” MSO, but said Dish has not announced any specific plans for an OTT offering. Dish has already developed DishWorld (pictured at left), a broadband-delivered, subscription service that offers several foreign-language TV packages. On the technology side, Dish has already hammered out an adaptive bit rate streaming architecture spawned by EchoStar’s acquisition of streaming video pioneer Move Networks in 2011.
The language in Monday’s announcement indicates that Dish will be measured in how it uses these new OTT rights, likely limiting them to go after areas that are not within reach of its traditional, satellite-delivered pay-TV service. The new, broader OTT streaming rights are “creating opportunities to add new subscribers and introducing the value of a multichannel subscription to a small subset of broadband-only consumers,” John Skipper, president of ESPN and co-chairman of Disney Media Networks, said in a statement.
In a note issued Tuesday, MoffettNathenson analyst Craig Moffett speculated that Dish could salt away those rights as it continues to flirt with a wireless network strategy and/or be used to target 5 million to 10 million homes that are “broadband only” or “cord nevers” that don’t subscribe to broadband or TV services.
And it preserved the notion of bundles that content owners can live with as distribution shifts toward OTT. "As we have heard in our prior discussions with other OTT startups, content owners have been focused on creating bundled structures that limit the risk of a la carte disintermediation," Moffett wrote.
While Dish has not said how it might pull the trigger on these new OTT rights, Moffett has some ideas.
“At first blush, the idea seems to jive well with DISH's ambitions as a wireless network operator (although, paradoxically, DISH investors don't want to see such a thing built, with or without partners). Like any OTT service, however, most of the time an OTT service would have to be delivered over cable or telco pipes,” Moffett wrote, noting that he expects Dish to join Netflix, Google and others to argue against usage-based broadband pricing and policies during the regulatory vetting of the proposed Comcast-Time Warner Cable merger.
"As we have heard in our prior discussions with other OTT startups, content owners have been focused on creating bundled structures that limit the risk of a la carte disintermediation," Moffett wrote.
The Dish deal would seemingly increase the likelihood that Disney has or will extend similar rights to other multichannel video programming distributors that are at least considering subscription tiers that they can offer out of their footprint.
And the extension of those rights is seemingly positive news for Sony, which is developing a broadband-delivered pay-TV offering that will feature live TV, on-demand content and DVR service. Sony plans to start tests later this year.
Intel Media was developing its own OTT service, but, according to sources, balked at the price and distribution commitments required to launch it. In January, it inked a deal to sell its “OnCue” assets to Verizon Communications. Verizon said it intends to use those assets to accelerate a next-gen IPTV platform for FiOS, but has not announced plans to launch an OTT service it can market outside its FiOS TV franchise areas.