The first half of 2015 brought us the launch of a whole bunch of new over-the-top streaming TV services, including HBO Now and Dish’s Sling. Now, at the midpoint of the year, all of those earnings reports and investor calls are rolling in and we can start to find out just how popular those services are. Or we could… if executives would talk. Instead, they hem and haw and hedge and make only two things clear. One: cord-cutters are real. And two: when it comes to streaming, Netflix is still the biggest elephant in the room.
Time Warner and Dish, respectively the parent companies of HBO/HBO Now and Sling, both held their earnings calls today. And though analysts and media both asked, neither would give up the goods on actual subscriber numbers for their digital offerings.
Time Warner CEO Richard Plepler, in their call, said that fewer than 1% of HBO Now subscribers had abandoned their regular pay-TV accounts when they signed up for the new service. That means that HBO Now is capturing more of the “cord-nevers” than the cord-cutters, which is good news for cable and content companies alike. “We see this as additive for our partners,” Plepler said. “There’s gold in the hills for them too.”
Turner Broadcasting CEO John Martin also spoke. (Turner, a Time Warner Company, is the parent of CNN, Cartoon Network, TBS, TNT, and other cable networks.) Martin admitted that there have been declines in U.S. subscribers, but that they have been “modest” and aren’t speeding up. He also didn’t express concern about the rise of the pared-down “skinny bundle” pay-TV providers have begun to offer, saying that Turner has “the types of networks that we think will be overly-represented in those type of bundles.”
They already have proof of that from their networks’ presence in an over-the-top skinny bundle: Sling.
Over on that call, multiple analysts tried to get Dish to, well, dish on their Sling subscriber numbers — but CEO Charlie Ergen wouldn’t budge. Analysts have done a bit of algebra and sussed out that Sling probably has between 250,000 and 300,000 subscribers. While Ergen said that one analyst’s math could “get pretty close” if he tweaked it, he would not confirm any numbers.
That’s because Sling isn’t separate from satellite viewing as far as Dish is concerned, but is instead just the next step in the entire future of their business. Cord-cutters, he explained, are inevitable.
“We’re fundamentally looking at the economics of how we run the business,” said Ergen, “and we’re in a mature-to-declining linear TV business as we know it. We’re at the beginning stages of the OTT business. It’s going to grow and accelerate. The businesses fundamentally appear to be economically similar. The value of a customer seems to be similar if you are smart about it.”
The linear TV business is “not in free fall,” Ergen added, but it has been declining since 2012, and OTT is clearly the wave of the future.
Ergen was speaking specifically about the literal value of a customer to investors, in terms of money in vs. money out, but he did tie to a broader point: cable and satellite may come and go, but people still really want to watch stuff. And he who has the stuff, has the power.
“The balance of power in content has moved,” Ergen said. “It used to be pretty even between content and distribution … but it’s totally, totally shifted to Netflix. Netflix is the most powerful content aggregator in the world today.”
Ergen added that Dish knows, specifically, how many of their customers are watching each of their networks, and when. “We know to the penny what content is worth to our customers,” he said, and that has shifted dramatically over time.
“Kids’ programming used to be in the top 3 or 4 things people watched,” Ergen explained. “Now our customers go to Netflix, and the kids hit ‘kids,’ and they know how they’re going to do it. And they don’t have commercials, and the parents like it better because there are no commercials. … The world has changed.”
