Despite It’s $25 Price, This Is Why Sling Is The Only Live TV Streaming Service Making Money
Over the last few months, we’ve seen Live TV Streaming Services raise prices across the board. In February, Hulu Live TV increased the price of their service from $40 to $45. Soon after, fuboTV raised the price of their service from $45 to $55 a month. In March, DIRECTV NOW introduced two new plans — PLUS ($50) and MAX ($70), while discontinuing their more compelling legacy plans. Last Month, YouTube TV increased their subscription from $40 to $50 a month.
The main reason behind the increases, is that many believe that most Live TV Streaming Services were losing $10-15 per subscriber per month — just on the cost of the content.
One name noticeably missing from the list, Sling TV. The service raised the price of their Sling Orange plan from $20 to $25 a month last summer, but that was their first price increase since the service launched in 2015. Now, according to Warren Schlichting, President of Sling, that’s because they’re the only one making money on the monthly service. “We still believe we’re the only profitable, gross margin basis OTT provider out there,” said Schlichting on the company’s Q1 Earnings Call.
The service may still be unprofitable, but it’s not because they’re losing money on every customer every month. There are other costs like streaming costs, R&D, engineering, marketing, and sales. How is Sling TV able to make money if they are half the cost of other Live TV Streaming Services?
While other services have competed to add more and more local affiliates, Sling TV has pushed subscribers to get them OTA. They even built a dedicated Android TV called AirTV that integrates OTA channels from your antenna in the Sling guide. That’s because the price of broadcast channels keeps going up every year, reaching about $10-15 per subscriber.
Additionally, the company keeps their most expensive channels in different packages and add-ons. While you can get ESPN and your Regional Sports Network, which generally cost ~$8-10 to pay-TV providers, those channels are available in different packages. In order to get additional channels, you have to add their Extra packs which are generally $5-10 add-ons — rather than requiring every subscriber to get every channel.
“I think Sling is proud of our ability to — we introduced this skinny bundle and we’ve been proud of our ability to keep it skinny and keep a very unique structure of add-on tiers”, said Schlichting
The company has also added subscriber revenue by charging for their DVR. Every other Live TV Streaming Service bundles their DVR with their plan, but instead Sling charges at $5 a month fee for subscribers who want to add the recording feature.
By keeping low prices, Sling TV has been able to maintain their position as the largest Live TV Streaming Service. Just last week, they announced that they had just over 2.4 million subscribers. While growth has slowed as competitors have entered, they have nearly 1 million more subscribers than any of their competitors.
Because of this, they’ve turned Sling from a streaming service to a streaming platform.
Just like Amazon Prime Video Channels, you can subscribe to premium OTT services through Sling, and aggregate the costs into single bill. Most of these aggregators keep 15-30% of each subscriber’s monthly fee. They’ve even added a free tier to compete with free ad-supported streaming services like The Roku Channel, Amazon’s IMDB Freedive, and Tubi.
While other services are trying to compete on price, while creating even fatter bundles, Sling has zigged, where others have zagged. Dish Network CEO, Erik Carlson, “With every move our competitors make, we become more differentiated, reaffirming our strategy of offering flexibility of the skinny bundle.”
There is certainly room to improve the platform, which Schlichting admits, “Our user experience and the value we provide both have places where we can improve.” But, for the time being — Sling remains the only true skinny bundle where you can also get live news and sports.
Does that mean they will stay never raise prices? Well, according to Schlichting, “Never say never, but we have kept our price even in the face of those pricing hikes and we have benefited from that. And so, I think we’ll continue to play that month and time as we grow.”