Digital's OTT Cannibals: Coming To Thieve Or Thrive?

Thirty-five dollars for 60 channels: Is that what it takes to upset the traditional pay TV model?

DirecTV Now has joined the fun, following up on the likes of the year-and-half-old Sling TV to offer a digital alternative to the monthly pay TV package of networks.

And just to remind you -- once again -- these two over-the-top digital pay TV services are coming from traditional pay TV providers DirecTV and Dish Network.

Talking cannibalization?  “While AT&T can limit sales of this product just to new subscribers, thereby limiting cannibalization of core DTV subs, it has no way or incentive to prevent cable or Dish subs from enrolling for DirecTV Now,” says a Barclays Capital report.

And vice-versa. If that isn’t all,  AT&T’s proposed deal with Time Warner will add another complication.

DirecTV Now offers up a decent deal for HBO Now/Cinemax, just $5 a month. All this might hurt that premium TV content channel app financial model of $15 a month -- or the number of traditional TV pay channel subscribers for HBO.



In part, talk of cannibalization might suggest why Dish Network has been mum in offering up specifics about how Sling TV is doing. Instead we get some estimates from outside sources. One recent projection from MoffettNathanson Research says Sling TV has 911,000 subscribers. And how is Dish Network’s core subscribers doing? This fourth quarter period might tell a lot -- especially considering what happened a year ago.

MoffettNathanson Research said during the last three months of 2015, Dish's core satellite TV business lost an eye-popping 141,000 subscribers,  a financial period that is traditionally strong for the pay-TV business. Dish Network itself has around 13.5 million subscribers.

All OTT services have some downsides. For example, DirecTV Now won’t have CBS at first. If consumers realize they don’t have the full complement of big TV broadcast networks -- along with cable network -- this might give them some pause.

Still, if you’re a TV consumer feeling the heat financially -- looking at a $90 to $120 monthly traditional cable/satellite/telco TV bill that doesn’t seem to stop escalating -- maybe you need to start cooling some of those flames.

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