Dish recently announced Sling, a new service aimed specifically at cord cutters. Digital distribution isn’t new. Streaming services are being offered by channels such as HBO and CBS, targeting a new generation of consumers eschewing cable packages. So what makes Sling a big deal? It has ESPN.
ESPN3 and WatchESPN isn’t new either. Consumers with a cable package probably have access to ESPN’s streaming service. But, Sling takes it a step further. It is strictly a digital offering, and at $20 it is much cheaper than a typical cable subscription. Live sports are one of the main reasons a lot of consumers just can’t cut the cord. However, if they can get ESPN on Sling, that could change the game.
Let’s say a typical cable package is $100 dollars a month. Now consumers can buy an HDTV antenna and get the broadcast networks for around $20. That takes care of CBS (NFL, College Football/Basketball), NBC (NFL, NHL, EPL), ABC (NBA, NCAA Football), and FOX (NFL, College Football, MLB). Sling at a cost of $20 now takes care of the cable channels: ESPN and ESPN2 (NFL, NBA, MLB, College Football/Basketball), and TNT (NBA). Factor in a Hulu, Amazon PRIME, or a Netflix subscription (roughly $10 each) and the sports-loving cord cutter can save anywhere from $30-$50 a month. Seems like everything is covered.
That is, if fans are OK with not watching their local team. Only the NFL broadcasts every game on nationally distributed channels. For MLB, NBA, and NHL fans, most of the games are on regional networks. An easy solution would be to buy digital offerings from the league, but League Pass, Sunday Ticket, and NHL GameCenter black out local market games. Most of the digital offerings are not purchased by casual fans, but instead purchased by fans who live outside of their market, or the sports obsessed. Sling doesn’t provide an answer for this issue.
The real change may come if local teams start offering digital options. The problem there is that most of the leagues control the digital offerings, with the best example being MLBAM, which controls all of baseball’s digital distribution. Even if local teams were to offer digital distribution it could get pricey. For instance, if a cord cutter wanted to watch the local Los Angeles teams, he or she would have to pay separate fees for the Lakers (Time Warner Sports), Clippers and Kings (FOX Sports West), and Dodgers (Time Warner Sportsnet). At $10 per channel plus HDTV, Sling, and Netflix, that would be just about as expensive as a cable bill.
These organizations may not want to provide a digital offering either. The lofty sales prices of the Clippers and Dodgers were in part because each teams’ respective local TV rights deals were expiring. The last thing those teams (and channels) want to do is limit the power of its advertisers or broadcast partners. Sling may be a win for cord cutters, but at the local level it will run into resistance.
The funny thing is that as much as this is being touted as a win for sports loving cord cutters, it is essentially the same thing cable companies do. It is training the consumer to buy a bundle, albeit a digital bundle. Dish isn’t even hiding the fact, saying that in the future there will be other bundles for purchase. So fans get ready to buy the Dish bundle with ESPN, but if they want Comedy Central and FXX they will have to shell out more for a comedy bundle.
For now, this is another step away from typical cable providers. This could be a step toward a la carte offerings, or it could just be a meet the new boss same as the old boss situation. ESPN has been increasing its digital offering for some time now, but that doesn’t mean its typical $6 per subscriber fee from cable providers has gone away. With the creation of Sling it will be interesting to see if this puts more power in the hands of the content providers, as cable companies get squeezed from both customers and channels.
Michael Colangelo is Assistant Director at the USC Sports Business Institute and Senior Editor of The Fields of Green.