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DISH misses on revenue but beats on subscriptions (DISH)
BI Intelligence
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DISH Network reported its Q4 2016 earnings yesterday, and while total revenues were lower than expected, the company managed to add subscribers for the second consecutive quarter. Here's how it performed on key metrics:
Revenue. DISH reported revenues totaling $3.72 billion in Q4 2016, which is down from the $3.78 billion during the same period in 2015. However, pay-TV average revenue per user (ARPU) reached $88.66 during 2016, up from $86.79 in 2015, due to overall price increases of pay-TV subscriptions.
Subscribers. In Q4 2016, net pay-TV subscribers increased by roughly 28,000 from the previous quarter, compared to a net loss of approximately 12,000 in Q4 2015 from Q3 2015. However, the average monthly churn for DISH subscribers – the rate at which customers stop subscribing to the service – increased in 2016 to 1.83% compared to 1.7% in 2015. This could be due to the fact that consumers are increasingly opting for digital services over traditional TV options.
DISH's efforts to expand its business model from being a pure-play satellite-TV provider to an Internet TV operator should help the company capitalize on the evolution of increased cord-cutting and broadband-only households.
Last month, Dish unveiled its new Android-based streaming video platform, AirTV. Along with housing Netflix, YouTube, and the Google Play Store on a single device, the new streaming player allows customers to add live local broadcasting stations into their guide through an external antenna. When an over-the-air antenna is connected to the AirTV Player, viewers can switch from local stations to Sling TV content, just like they would on regular cable television. Most notably, AirTV owners don't need a Sling TV subscription, which further exemplifies the future of content providers and the need to diversify their portfolios outside of cable subscriptions.
Meanwhile, DISH’s skinny bundle platform Sling TV continues to be the main driver behind DISH’s overall subscriber growth, according to analyst data cited by Fortune. And while DISH does not break out Sling TV subscription numbers, the streaming service was estimated to surpass the one million subscriber mark this past October, according to Bloomberg. In comparison, HBO’s streaming service HBO Now recorded two million subscribers as of this month.
Over the last few years, there’s been much talk about the “death of TV.” However, television is not dying so much as it's evolving: extending beyond the traditional television screen and broadening to include programming from new sources accessed in new ways.
It's strikingly evident that more consumers are shifting their media time away from live TV, while opting for services that allow them to watch what they want, when they want. Indeed, we are seeing a migration toward original digital video such as YouTube Originals, SVOD services such as Netflix, and live streaming on social platforms.
However, not all is lost for legacy media companies. Amid this rapidly shifting TV landscape, traditional media companies are making moves across a number of different fronts — trying out new distribution channels, creating new types of programming aimed at a mobile-first audience, and partnering with innovate digital media companies. In addition, cable providers have begun offering alternatives for consumers who may no longer be willing to pay for a full TV package.
Dylan Mortensen, senior research analyst for BI Intelligence, has compiled a detailed report on the future of TV that looks at how TV viewer, subscriber, and advertising trends are shifting, and where and what audiences are watching as they turn away from traditional TV.
Here are some key points from the report:
Increased competition from digital services like Netflix and Hulu as well as new hardware to access content are shifting consumers' attention away from live TV programming.
Across the board, the numbers for live TV are bad. US adults are watching traditional TV on average 18 minutes fewer per day versus two years ago, a drop of 6%. In keeping with this, cable subscriptions are down, and TV ad revenue is stagnant.
People are consuming more media content than ever before, but how they're doing so is changing. Half of US TV households now subscribe to SVOD services, like Netflix, Amazon, and Hulu, and viewing of original digital video content is on the rise.
Legacy TV companies are recognizing these shifts and beginning to pivot their business models to keep pace with the changes. They are launching branded apps and sites to move their programming beyond the TV glass, distributing on social platforms to reach massive, young audiences, and forming partnerships with digital media brands to create new content.
The TV ad industry is also taking a cue from digital. Programmatic TV ad buying represented just 4% (or $2.5 billion) of US TV ad budgets in 2015 but is expected to grow to 17% ($10 billion) by 2019. Meanwhile, networks are also developing branded TV content, similar to publishers' push into sponsored content.
In full, the report:
Outlines the shift in consumer viewing habits, specifically the younger generation.
Explores the rise of subscription streaming services and the importance of original digital video content.
Breaks down ways in which legacy media companies are shifting their content and advertising strategies.
And Discusses new technology that will more effectively measure audiences across screens and platforms.
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