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.
1) Less customer hardware (satellite dish, set-top-box, etc.) to manage
2) Higher margin options for advertising due to digital style targeting
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.”