ENGLEWOOD, COLO.—Following a milestone carriage agreement with the Walt Disney Co. locked up, and more deals with unnamed content owners reportedly to come soon, Dish Network Chairman Charlie Ergen is contemplating a video-over-IP service that would launch by the end of the year. Looking at the ever-expanding landscape for IP-delivered video services, he clearly has little choice if he wants Dish to remain relevant.
Since May 2012, Dish Network has dabbled in IPTV video streaming; offering foreign-language programing from around the world with no satellite dish required. DishWorld IPTV uses a broadband Internet connection to deliver top International programming to a TV set with a compatible Roku player or directly to an IP-enabled device. So, the company has experience with serving video globally and leveraging user analytics in order to generate new kinds of revenue.
On a recent conference call to report the company’s first-quarter 2014 earnings, Ergen said he sees an opportunity to attract “cord nevers” or cord-cutters that don’t want to pay for channels they never watch. The over-the-top IPTV service would allow users to pick only the shows they like and order them on-demand individually, or pay for streamlined packages.
Dish needs a lot of variety in its content offering if it is to be successful and says that although it now has several deals in place, it is looking for more. The plan is to offer bundles of TV channels that skew to urban adults 18-35 for $20-$30 per month.
Dish Network has dabbled in IPTV before; offering foreign-language programing from around the world with no satellite dish required.
”OTT is an experiment,” Ergen said. “It’s a skinnied-down version of pay TV targeted at a different class of people that we don’t believe we or Disney are getting today.”
He also said he isn’t sure that Dish can make money on the new service today, but sees it as an investment in the company’s future. “OTT is not going to move the needle this year for anybody,” Ergen said. “It’s a precursor to where we think the industry is going.”
When the Disney deal was announced in March of this year, Anne Sweeney, then president of Disney/ABC Television Group and co-chair of Disney Media Networks, told an audience at the Financial Times Digital Media Conference in London that video delivery via IP was central to Disney’s strategy going forward.
”In addition to providing Dish customers with access to our content across multiple devices, this deal offers for the first time ever a pay TV provider the rights to stream clear, linear video-on-demand content as part of its internet delivered, IP-based personal subscription service,” she said.
The Watch ABC, Watch ABC Family, Watch Disney Channel, Watch Disney XD and WatchESPN apps are now available to Dish’s 14 million video subscribers, who can access live and on-demand news, entertainment and sports programming on computers, smartphones, tablets, gaming consoles and connected devices. Access to Watch Disney Junior as well as authenticated services from SEC ESPN Network and Longhorn Network will launch later this year.
Under terms of the agreement, Dish customers can now watch live programming from ABC Family, Disney Channel and Disney XD as well as live network streams of ABC; which are currently available in New York, Los Angeles, San Francisco, Chicago, Houston, Fresno, Philadelphia and Raleigh-Durham. In addition, live events and programming from ESPN networks—including ESPN, ESPN2, ESPN3, ESPNU, ESPNEWS and ESPN Deportes—are now also accessible. ESPN Goal Line and ESPN Buzzer Beater are available on WatchESPN when those channels are in season. Video subscribers are required to log in with their Dish online IDs and passwords to access all services.
Dish Network Chairman Charlie Ergen envisions new revenue from video services offered over the Internet.
In addition to live streaming, Dish video subscribers can watch current episodes of ABC and ABC Family original series the day after they air online at ABC.com and ABCFamily.com or on smartphones and tablets via the WATCH ABC and WATCH ABC Family apps (which are available free in the App Store, Google Play Store, Amazon Appstore and Windows Store). WATCH ABC is also accessible on Apple TV.
The proposed Dish Network IPTV service will be available to a variety of IP-enabled devices, including smart TVs, Google Chromecast, Roku boxes, Xbox One, Plat Station and other videogame consoles as well as on the new Kindle Fire tablets, according to Ergen.
He added that the IPTV service could provide additional revenue for both Dish and content owners by targeting specific households with interactive advertising and other promotions. It also strengthens Dish’s on-going wireless strategy, as the company has spent six years acquiring spectrum for mobile Internet services, Ergen said.
While the Dish OTT service will include on-demand content, fast-forwarding will be disabled so that users can’t skip ads—a major provision of the agreement with Disney—and is limited to a single video stream per subscriber.
For Q1, Dish added a net 40,000 TV subscribers, and reported quarterly revenue of $3.59 billion, up 6.5 percent. Q1 2014 net income was $175.9 million, down 18 percent from the 2013.
In the face of declining TV service revenue and the proposed purchases of DirecTV by AT&T, and Time Warner Cable by Comcast, it would appear Dish has no option but to consider a national IP footprint, whereby affordable video and data services could be offered to remote areas not accessible by cable operators (a vision shared by AT&T).