One of Dish’s aims in developing Sling TV was to keep the cost low enough to attract those otherwise disinclined to pay for TV service.
“Affordability is a key attribute of the Sling TV service,” Dish president Joe Clayton said at CES. “The price will be substantially — and I mean substantially — below” traditional pay-TV offerings.
Compared to Netflix, Hulu Plus and other OTT streaming services, however, the $20 a month base price for Sling TV is actually pretty high. And that higher price point, and therefore higher ARPU, is allowing Sling to experiment with a business model other streaming services have eschewed so far: subsidized hardware.
Starting today you can get a free Amazon Fire TV Stick or Roku Streaming Stick if you sign up for 3 months of Sling TV. You can also get $50 off a Fire TV or Roku set-top box. It’s an OTT twist on the mobile-phone model, in which service providers subsidize the cost of handsets.
Sling has to play it carefully here. Part of the pitch for Sling TV is that there’s no long-term commitment and no special equipment to buy, so linking the service too closely with a hardware offer runs the risk of muddying its marketing message. But Sling’s fling with Amazon and Roku raises the question of whether we might see more such tie-ins between services and connected devices, particularly as streaming services become more ambitious in their offerings, such as multichannel services.
The mobile industry is already moving toward offering sponsored data plans for streaming services, which is another form of subsidizing the means of consumption. It’s not inconceivable that at some point it could make sense for a streaming service with a high enough ARPU to subsidize the cost of unlocked hardware in exchange for an extended commitment. Especially so if, say Google, were to cobble together its own wireless data plan not tied to any one carrier.
I’m obviously just spit-balling it here. But higher ARPUs on streaming services could open up a range of new business models for device makers as well as service providers.