Dish Breaks Some Dishes in Creating Sling TV

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Jae C. Hong/Dish Network CEO Joe Clayton introduced Sling TV in January, and it went live in February.
The biggest disruptor of the pay-TV industry may very well be one of the leading pay-TV providers being disrupted. Dish Network (DISH) rolled out Sling TV nationwide on Feb. 9, giving video buffs tiring of inflating cable bills a way out.

The online service offers live streams of several leading cable networks, including sports channels, for just $20 a month. The base package includes ESPN, ESPN2, TNT, TBS, Food Network, HGTV, Travel Channel, Adult Swim, Cartoon Network, Disney Channel, ABC Family, CNN, El Rey and Galavision. AMC Networks (AMCX) will be added to the basic plan soon.

The $5 add-ons include kids (Disney Junior, Disney XD, Boomerang, Baby TV and Duck TV) and news (HLN, Cooking Channel, DIY and Bloomberg TV), with sports coming soon (SEC Network, ESPNU, ESPNEWS, ESPN Buzzer Beater, ESPN Goal Line, ESPN Bases Loaded, Univision Deportes, Universal Sports and beIN Sports). Sling International TV covers Arabic, Bangla, Brazilian, Cantonese, Filipino, Gujarati, Hindi, Malayalam, Mandarin, Punjabi, Taiwanese, Tamil, Telugu, Urdu and Vietnamese.

The Unlikely Revolutionary

It would seem that Dish has more to lose than gain with Sling TV. It has 14 million subscribers, and the average revenue per user during the third quarter clocked in at a whopping $84.39 a month. That's a lot less than the $117.30-a-month average that satellite rival DirecTV (DTV), and Dish doesn't have as many pay-TV subscribers as cable giant Comcast (CMCSK).

Sling TV obviously doesn't offer the entire gamut of channels available through Dish, but is there enough there to get folks to settle for paying less than a quarter of what they're paying now. Thankfully for Dish, most of the subscribers will likely come from the ranks of DirecTV and Comcast subscribers. They are larger. They are, on average, more expensive.

Sling a Song

Sling TV isn't resting on its current catalog. It announced on Feb. 16 that Epix -- the movie channel with more than 2,000 movie and entertainment titles -- would be added.

In other words, it's not just live television and TV shows on demand anymore. Sling TV is taking a page out of the Netflix (NFLX) playbook by blending streaming movies and shows, and that's fitting since Netflix was also a disruptor that chose to disrupt itself before someone else did. Netflix was carving out a cozy living mailing out DVDs when it moved in 2007 to begin offering streaming on PCs.

Dish realizes that it will need more than just a great value proposition. It needs to borrow another page out of the Netflix playbook, making the offering seamlessly accessible across TVs. Netflix struck deals with the makers of video game consoles and set-top boxes, and now Dish is providing financial incentives. It's currently offering free Roku and Fire TV sticks or $50 off more advanced Roku and Fire TV set-top boxes to folks prepaying for three months of Sling TV.

None of its pay-TV peers are doing anything as disruptive as Sling TV, and that's a good thing. Instead of being a laggard in pay TV, it can be a leader in Web-based television. Well played, Dish.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of AMC Networks and Netflix. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.
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