DISH Network is a difficult position. Its video business has lost 1.2 million subscribers over the last year, with defections in its core satellite side dragging down any gains made from live streaming service Sling TV. At the same time, these businesses are supposed to fund the buildout of a 5G wireless network.
But for Sling executive Liz Riemersma, all of this chaos is something to be embraced.
“For me personally, whenever there’s this level of disruption and change going on, there’s always opportunities to learn something new, to grow something that could be big,” she said in an interview with Cord Cutters News.
Riemersma, vice president of strategy, business development and international for Sling TV, was the keynote speaker at Parks Associates’ Future of Video conference on Tuesday. She sat down with Cord Cutters News for an extended interview.
The following is our conversation edited for brevity and clarity.
Cord Cutters News: DISH this summer reorganized so that Sling TV and DISH would be run under the same team. How does that change the way you look at the two businesses?
Riemersma: They are really truly complimentary services. They’re totally different formats. They’re very different customers. There’s probably a 20-year age difference between the average age of a customer on DISH and the one who’s on Sling, and what we find with our DISH audiences, they’re really heavily invested in video. It’s really a primary means of communication. And on the Sling side, it’s definitely more entertainment first. They are less reliant – they have other entertainment options. And then we have customers who are with us all the time and have been in business for many years. But we also have a lot of customers who will come on and come off. They follow different seasonal patterns as it relates to content.
Cord Cutters News: I’m surprised to hear that it’s complimentary. If you look at the earnings results, DISH has been losing a lot of traditional customers quarter after quarter, while Sling TV is adding customers. It’s surprising that you don’t see that dynamic and see it as a potential switching mechanism.
Riemersma: I would take a step back and look at the overall industry. If you’re looking at people who are cutting off traditional pay TV now, which they are across all services, there’s just a certain percentage of them that are going through to be the VMVPD (virtual multichannel video programming distributor) space so they’re basically just replacing content they had here with the content they had here.
And then there’s a certain amount that are just totally like, I’m done. I’m not watching that kind of content. Or if I do, it’ll just be episodic and seasonal. So as it relates to a full cable service replacement product, Sling is a really unique product, but it’s not that. Mainly because we don’t have local channels in many markets.
But what we found is when people are really looking for a true replacement to cable, or to satellite, they’re looking for the same content delivered differently. So we really appeal to people who either don’t need those channels, and they don’t want them or they’re looking for really specific seasonal event based stuff. So for that reason, our customer base on satellite, if they’re disconnecting with us, they’re looking for another service that’s like that. We actually don’t have that stuff because there’s not a baseline expectation that a pay TV linear (subscriber) will be part of the equation.
Cord Cutters News: Why is that? Is it the cost to carry those local channels?
Riemersma: Yes, it’s cost.
Cord Cutters News: The (Federal Communications Commission) is considering applying cable-style regulations that would require live streaming services like Sling TV to negotiate with individual local stations. I’m curious if you had any thoughts on this move?
Riemersma: Honestly I don’t know enough about it to give you an educated comment. If it’s a government mandate that we have to do something we’re obviously going to have to do it.
Cord Cutters News: How are you preparing for that world where cord cutting really takes hold and the business disappears. What’s the backup plan?
Riemersma: What we’re doing on Sling is the backup plan because you’re pairing a product that is known and understood. Even if you don’t have people who subscribe for a full year, there’s millions of people who will come in for a couple of months at a time or three or four months at a time and spin off the same way.
Probably for the next five years, there’s going to be a certain amount of content that’s always going to be streaming and then on those channels of demand, whether it’s sports or other sort of entertainment content. I think that will still exist, it just means that you need to be ready as a service provider for this kind of behavior, on-off-on seasonal switching, and being able to surface content that may appeal to them. In a different way. So that’s where we when we talk about using machine learning or targeting or all of that it’s actually in support of that.
It’s more of, ‘Hey, Roger. It seems like you don’t want to watch Real Housewives of Atlanta (Editor’s note: I have not watched any of the Real Housewives series but wouldn’t be opposed to it) anymore. But did you know that we have a growing Hip Hop channel and it’s free?’
Cord Cutters News: So you actually have recommendations for your free content even as someone is canceling their service?
Riemersma: They’ll get messaging. Right now, I’ll say it’s not as smart as I want it to be. We’re working on the recommendations that underpin it. Because the nice thing about our free stream service is we distributed it before and behind the paywall. So someone who’s paying for paid programming also gets the free channels. So you actually find people who start watching the free channels while they’re paying. You can just continue watching these channels, right? But we typically get enough of an understanding of the depth and the breadth of content that they’re watching to make at least two to three smart recommendations about where they can be watching.
Cord Cutters News: What role do you see Freestream playing in your broader video strategy?
Riemersma: It’s more that we care about maintaining the level of engagement that we have with customers. The idea is that the value of the interaction and engagement continues. For us, we look at it as engagement is revenue. It’s very easy to quantify when they’re in a paid subscription, what that means, but that continues when they’re not on a paid subscription, because you still have an amount of money that’s associated with whatever their viewership is.
If you are going to a situation where you’re moving from, hey, this person’s disconnected, it means we’re gonna have to win them back in six months when this thing comes back on that they want to watch and spend money there. We’re looking at it and we’re like, we don’t need to do that if we can give them an incentive to continue watching free content that looks like paid content, or is sitting next to it. What it means is when that moment comes for them to re-sign up for the paid content, they’re actually there on the platform. It’s like a catchment pool.
Cord Cutters News: Are you seeing that for DISH customers or Sling customers or both?
Riemersma: For DISH customers, when they disconnect they disconnect. We are looking at ways that we can bring them more content. Any one of our more recent devices that we produced or manufactured in the past 10 years have connectivity. We deliver content that may be on-demand content from their paid offering. We deliver channels to them that may be considered free on the streaming side, across over on the paid side as well.
So we do know that there’s a value for them. Again, engagement is a little bit different on DISH because there’s a different payment model and different customer equation, but the same principle holds true in that it is a primary predictor of churn. So you want to be able to give customers the content, either content optionality, new content that they’re not getting on their linear feed, additional streaming services – those things have actually been really in play for us on the DISH side.
Cord Cutters News: Free ad-supported services are having a moment this year and people are talking about them all the time. Fox says it will be the primary way that people will view its content down the line. Do you see Freestream being in that kind of position or is it purely a complimentary play?
Riemersma: I don’t. I think the role that we have it in makes sense. We’re very financially careful about where we invest as it relates to bringing people on to our platform. And the difference in revenue level between a paid service and a free service is huge.
I would say never say never, and there’s probably a role that it can play on other platforms. But as it relates to our existing pay TV business, it will be complimentary.
Cord Cutters News: DISH has more satellite subscribers, but if you look at where things are headed, you can see things flipping in a few years. How are you preparing for that?
Riemersma: We’re looking at opportunities that come out of our impending merger with Echostar. Echostar Hughes service has really great high speed broadband, same audiences, same location, same geography, which is rural.
That’s probably more where our focus is when we think of DISH subscribers – what other services can we provide them? Or there are Hughes subscribers just getting high-speed internet for them that would make sense to become DISH subs.
Cord Cutters News: Looking at the next three to five years, what excites you most about the video business?
Riemersma: Honestly, the level of change to me, it’s exciting. And it’s because I haven’t been in this industry my entire life. For me personally, whenever there’s this level of disruption and change going on, there’s always opportunities to learn something new, to grow something that could be big. I actually really like it. And it’s because I have very few preconceived notions about what it should look like.