Interesting break out from Colin Dixon @ nScreenMedia on the economics of streaming vs. traditional pay TV providers.
Monthly revenue per customer:
1) Dish Network — $103
2) Sling TV — $20 (↓ 81% less)
The cost to acquire a customer:
1) Dish Network — $700
2) Sling TV — $30 (↓ 96% less)
If these numbers hold, then it would take the streaming provider 1.5 months to re-coup the customer acquisition costs versus 6.8 for traditional pay TV.
There are other tradeoffs for streaming TV providers.
Positive tradeoffs:
1) Less customer hardware (satellite dish, set-top-box, etc.) to manage
2) Higher margin options for advertising due to digital style targeting
Negative tradeoffs:
1) Higher churn due to lack of annual contracts
2) Thinner margins due to lower monthly bill
Quote from Charlie Ergen — Chairman and CEO @ Dish.
“I think it’s fair to say that advertising will be a bigger portion of revenue and margin for OTT than it is in linear TV.”
