Streaming Media West: Sling TV Hits the Reset Button on Pay TV
Over-the-top (OTT) delivery isn't destroying the TV experience, it's reinvigorating it. Kicking off the 2018 Streaming Media West conference, Warren Schlichting, executive vice president and group president for Sling TV, explored the ways streaming is leading to a healthier and happier business model for both providers and viewers. While the print industry is struggling to stay relevant, TV is undergoing a transformation.
"In the beginning, we had countless haters. Actually, we still do," Schlichting said. As the streaming TV business started up, many wanted to stay with the old model.
There are currently 87 million traditional pay TV customers in the U.S. and 7 million streaming TV customers. While it will take years and move in fits and starts, Schlichting is sure those numbers will reverse.
"We believe at Sling that streaming TV can actually reverse the trend that we've seen in pay TV," Schlichting said. TV won't go away, but the old model will.
Basic problems of streaming video over the internet have been solved, so the OTT industry is now trying to prove the viability of its business model.
"I feel like I'm the luckiest guy in television," Schlichting said. "We didn't know where this thing would end up, and we still don't." But he's disrupting an established industry on a grand scale, and that's what gets him out of bed in the morning.
Guiding that disruption means challenging some established ideas. For one, the idea that churn is a good measure for the health of a service. In a world with no commitments or contracts, churn stops being useful.
"We made it incredibly easy for people to come and go, and you know what happens when you do that? They come and go," Schlichting said. The industry needs to embrace that behavior. There are plenty of reasons for churn—cost, seasonality, new competition, new incentives, platform stability—and all of those are increased in the OTT world.
Stability is one issue where OTT still needs to make progress. Traditional TV just works. OTT needs to match that level of reliability. The pay TV industry operates in a closed loop, so errors are easier to fix. Streaming has many more variables.
"Streaming services, just being honest here, they have a ways to go," Schlichting said.
Data will lead the way, but getting answers from data isn't easy. Sling now captures 10,000 times more data per second than it did at launch in 2015, and the company has more data scientists than Schlichting ever imagined possible. But weeding out false positives and finding value in data takes times. The goal is to anticipate issues in real-time and solve them before they become serious problems.
As the OTT space grows, Schlichting says it needs to avoid the difficulties of traditional pay TV. "That big bloated bundle has got to go," Schlichting said. "Breaking the bundle is a critical piece of consumer satisfaction." While a la carte programming is a long ways off, viewers hate paying for channels that aren't important to them.
"If you continue to jam customers with programing they don't watch, with prices that go up every year, we're only continuing the sins of the past," Schlichting said.
What we have now is a once in a lifetime opportunity to hit the reset button in favor of the consumer, and the primary obstacle is the entrenched habits of the past.
"The future of TV is happening right now," Schlichting said. "It's actually being reinvented as we speak."
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