Dish Network (NASDAQ: DISH), announced the launch of DishNet this past week, a broadband TV service that will target rural areas of the US with a OTT (Over-The-Top) cable service for un-served or under-served consumers. Seeking to break with bundled video, the satellite TV provider is in current talks with Viacom, owner of MTV, Univision, and Scripps Networks for programming rights. As Dish, the second largest satellite TV provider behind Direct TV, moves to enhance its coverage, satellite broadband just may be the key as a differentiator.
Video Migrating to Web
Dish Co-Founder Charlie Ergen is seeing a video only service decline as subscribers move to use package deals with cable operators who bundle video, Internet, phone, and now mobile service. Moving to stem subscriber losses, 10,000 in the 2nd Qtr, Ergen believes the launch of DishNet will offer customers a broadband option similar to its pay TV competitors. With TV Everywhere taking hold as a content enhancement for cable providers, Dish Network sees the broadband launch as a way to disrupt the programming bundle. See (Dish Disappoints with Subscriber Losses)
Demand for Lower Priced Video
Since the satellite provider has a robust knowledge of subscription video and deals with major video networks, Ergen believes this relationship will work to offer lower priced specific program packages without the extremely expensive sports channels like ESPN. He is confident there is a niche market for consumers who do not watch sports. This would be the first major deal with a video service provider and major video programmers to reach a successful conclusion. Past attempts by Apple TV and Google TV have not been able to swing a sufficient deal. See (Dish Said to Be in Talks With Viacom About Internet TV)
Video Audience Evolves
As more young consumers look for alternative video options on broadband, we may be seeing cracks in the long-standing video bundle. This growing market segment cannot be ignored for the long-term since broadband has opened the content revolution in video access. The dynamic of how we watch video will continue to evolve from large bundled content to access to smaller more niche programming. Competition for video access will continue to drive innovation on the broadband front, continually molding the business environment of how video is offered for consumption.
Cable operators will be watching as Dish Networks attempts to make history as the video service provider able to crack the (OTT), video programming package deals. Cable’s retail prices must reflect high-costs on offering large video packages. However, the price-point relationship with consumers has reached diminishing returns as mature markets historically end their dominance.