The second largest satellite TV operator in the U.S.,
DISH Network Corp. (
intends to launch an electronic device that would facilitate smooth
streaming of live TV shows to its subscribers.
Higher penetration of smartphones/tablets, coupled with
increased rollouts of 3G/4GLTE technology, have completely changed
the TV viewing options for customers. Viewers are now demanding
multiple viewing options with anytime and anywhere TV service
facility. In particular, the younger generations, who are extremely
tech savvy, are hugely influenced by such changes. Subsequently, in
a bid to target the younger group of customers - mainly belonging
to high schools and colleges - Dish Network will offer them the
streaming of handful of popular channels at lower price on their
tablets/smartphones or PCs.
At present, the U.S. Pay-TV market is getting saturated on the
back of stiff competition from other cable and telecom players. In
addition, the launch of video streaming services from
) and Hulu at lower price has further intensified the competition.
Moreover, sluggish economic growth coupled with continuous increase
in cable prices have forced most of the subscribers to cut their
cord and opt for cheaper online video services. In order to counter
such competition, Dish Network is trying to explore new markets
with its innovative over-the top product.
Dish Network is already offering online TV services outside the
U.S. known as Dish World. Moreover, the acquisition of Blockbuster
video chain, which has a huge collection of online movies, will
further enhance its video streaming services.
However, there are certain issues, which Dish Network has to
encounter. Firstly, availability of video streaming services at
cheaper rates may expand its churn rate as more customers of Dish
Network will subscribe the video streaming services at cheaper
rates at the expense of costly Pay-TV services.
Secondly, it will be difficult for Dish Network to gain
transmission rights of popular channels as the Media companies will
always offer bundled channels (as per the existing business model),
which in turn will drive up Dish Network's programming
Therefore, taking into consideration these negative catalysts,
we believe that negotiation with the Media companies will be an
extremely difficult task for Dish Network, as these network giants
may loose considerable amount of ad revenue from such deal.
Currently, Dish Network has a Zacks #3 Rank, implying a
short-term Hold rating on the stock. Furthermore, considering the
fundamentals we are also maintaining our long-term Neutral
recommendation on the company's shares.
DISH NETWORK CP (DISH): Free Stock Analysis
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