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ESPN will be available through a streaming service, no cable required ESPN will be available through a streaming service, no cable required
(about 2 hours later)
In a move that could draw a mass exodus from cable, Dish Network’s Sling TV said it will soon launch a stand-alone streaming service that includes ESPN and other network channels without being tied to a paid TV service. For many TV viewers, the only reason to keep paying for expensive cable subscriptions is to watch sports. And for that, they invariably need ESPN, the powerful network that has exclusive rights to many of the country’s most popular football and basketball games.
Dish announced Monday that the $20-a-month online service will include ESPN, ESPN2, CNN, TNT, Food Network, HGTV and the Cartoon Network and won’t be tied to a paid-television service like satellite or cable TV. Instead consumers will be able to get those channels streamed live or on-demand over their televisions, smartphones and tablets. Now, that linchpin is being removed. For the first time ever, sports fans will be able to watch ESPN’s programming streamed online to their tablets, laptops, smartphones and TVs—all without paying a cable or satellite bill.
The service will be available later this month and could significantly alter the economics of the television industry, which has relied on cable viewers for the majority of their revenues. But as HBO, Showtime, CBS and other networks migrate to the Web with their own online services, sports — ESPN in particular — has kept viewers in their cable packages because of ESPN’s exclusive rights to broadcast NFL, college football and other sports programs. Over the last few days, ESPN saw the biggest audiences ever for cable television with its college semifinals games. For $20 a month, viewers will also be able to watch CNN, the Food Network and the Cartoon Network through a new streaming service, called Sling TV. Dish Network, which is launching Sling, said the service will debut sometime later this month.
Dish said in a release that the service is geared for cord cutters or younger audiences who have never subscribed to a satellite or cable television service. The company won’t require a contract, credit check or commitment to use the service for a specific period of time. With Monday’s announcement, 2015 is shaping up to be the year when consumers have more reasons than ever to abandon the expensive bundles of cable channels offered by companies like Comcast and Verizon.
“Sling TV provides a viable alternative for live television to the millennial audience,” said Joseph P. Clayton, DISH president and chief executive. “This service gives millions of consumers a new consideration for pay-TV; Sling TV fills a void for an underserved audience.” HBO and Showtime are planning to roll out their own digital streaming services early this year. Sony Entertainment Network will also offer online viewing of channels like Viacom’s MTV, Nickelodeon and Comedy Central. Millions are already used to paying for Netflix and Hulu Plus for their television viewing.
The company envisions users will cobble  Sling TV with other services, such as Hulu or Netflix, bringing more content online to replicate the experience of cable television, but at perhaps a lower price. But ESPN’s entry into online streaming is different. The tremendous demand for ESPN is unparalleled in the cable TV world. The top ten most-viewed programs in cable television history are all ESPN programs. And with more people watching TV shows online according to their own schedules, live sports are one of the few things left on TV that bring entire families together to watch in real-time.
“Consumers can now watch their favorite shows on their favorite devices that they already use to watch video. Live television, including ESPN, for $20 per month with no commitment or contract, is a game changer,” said Roger Lynch, chief executive of Sling TV. “The arrival of Sling TV lets consumers, who’ve embraced services like Netflix and Hulu, take more control of their video entertainment experience.” On New Year’s Day, the biggest cable audience ever tuned in to ESPN’s new college football playoffs, with 28.2 million viewers watching the Rose Bowl game between Oregon and Florida State, and another 28.3 million catching the Ohio State-Alabama game. Then on Saturday, the NFL wild card game between the Arizona Cardinals and the Carolina Panthers became the eighth most-watched cable program ever, drawing 21.7 milion viewers.
The demand for ESPN is tremendous. The shift to digital is a high-risk bet for the television industry, which has been dependent on one reliably lucrative model for decades. Companies like Disney-owned ESPN charge cable and satellite companies a certain amount per customer for their programming. The cable and satellite companies in turn charge consumers an average $95.73 per month, according to media research firm SNL Kagan.
The biggest audiences in cable TV history tuned in to ESPN’s new college football playoffs on New Year’s day. For the Rose Bowl Game, 28.2 million viewers watched Oregon defeat Florida State 59-20, according to Nielsen. The All State Sugar Bowl brought in 28.3 million viewers as Ohio State took over top-seeded Alabama 42-35. Subscriptions to Hulu, Netflix and Sling TV are less than half that amount, though they could also quickly add up.
Then on Saturday, the NFL Wild Card game between the Carolina Panthers and Arizona Cardinals ranked eighth in overall viewers in cable history. The game brought in 21.7 million viewers. If too many consumers abandon their Dish Network subscriptions in favor of Sling, the satellite company could lose too much in revenues from its core business.
“This is a game changer for the industry because Dish has be sure it doesn’t cannibalize its existing customer base,” said Chris Young, an analyst at SNL Kagan. “ESPN is a must-have on the basic cable platform and the big question is if $20 is the right point for consumers to push back on cable.”
Some popular cable networks such as Fox News and AMC have not indicated any plans for their own stand-alone streaming services. But by waiting out the shift, they could risk being left behind, if consumers think their presence alone isn’t enough to justify a big cable bill.
Dish Network says its market studies show that most interest in Sling TV will come from millennials who have never subscribed to cable or satellite and probably never will. To appeal to these estimated 12 million consumers, Dish won’t require contracts, credit checks or installation fees.
But to prevent families from cutting their satellite television subscriptions for Sling TV, Dish said the online service will only play on one device at a time. In other words, if you want to play ESPN on your phone and your tablet, you’ll have to pay $40 per month.
“Sling TV provides a viable alternative for live television to the millennial audience,” Dish CEO Joseph Clayton said Monday in a speech at the International Consumer Electronics Show in Las Vegas.
Disney, too, praised the announcement, saying the move won’t hurt its cable network.
“We are excited to see our innovative efforts with Dish come to fruition with this value package targeting the 12 million broadband-only households,” Disney said in a statement. “This will support the overall multichannel subscription model, while offering viewers yet another way to access Disney and ESPN content.”
But millennials may not be the only ones interested in these streaming services. Older audiences have also expressed frustration with ever-increasing cable bills. Industry experts say it’s only a matter of time before masses of consumers flock online as an alternative to cable.
“This is huge. For the company that has most vigorously resisted offering its premier sports channel separate from the broad bundle of Disney programming, this is a sea change and indication that a la carte cable has finally made it over the hump,” said Gene Kimmelman, president of public interest group Public Knowledge, which has advocated for channels to be offered a la carte for consumers.
“Once you offer ESPN online on its own, it is only a question of time before consumers demand more ways to pick and pay for only the channels they want,” said Kimmelman.