Dish Network (
) competes with satellite pay-TV service provider DirecTV (
), cable companies like Comcast (
) & Time Warner Cable (
) and telecom operators like AT&T (
) and Verizon (VZ) in pay-TV business.
The company has struggled to find an engine of subscriber growth
in the recent past and is instead looking for ways to improve its
financial position while holding on to its current subscribers. One
of the ways to do so is extract more revenues out of the current
customers and Dish has been trying to just do that by perking up
its on-demand offerings. If Dish Network can grow its
as a result to close to $60 per subscriber per month by end of our
forecast period, it could lift
our current price estimate of $24.87
by more than 5%.
Dish Adding to On-Demand Content Gradually
Dish experimented with a 99 cent offering for selected Hollywood
hits via its on-demand service. The company recently signed a deal
with Starz entertainment to include its MoviePlex channel to its
package. The content from this channel along with other titles from
Starz and Encore are expected to be available for on-demand
Additionally, the company has now started offering certain 3D
movies as well. While these movies are likely to be higher priced,
their sales could be lackluster as adoption of 3D TVs has been
rather slow. Sony and Best Buy have specifically pointed to weak 3D
TV sales as a concern.
TV Everywhere + On-Demand
Dish Network's TV everywhere initiative allows customers to
access their satellite TV services remotely with the use of an
application over 3G or WiFi networks and aims to provide increased
convenience to customers, thus increasing the chances of more
content being watched. Couple this with its additional on-demand
offerings, and it looks like Dish is betting on the fact that
customers will likely ordering more on-demand movies given the
flexibility of viewing.
While these moves are encouraging, Dish Network's ability to
increase its average subscriber fee due to incremental revenues
from on-demand offerings could be challenged by growing popularity
of online video platforms like Netflix (NFLX) and Hulu as well as
Apple's (AAPL) digital rentals and sales through iTunes.
You can see
the complete $24.87 Trefis price estimate for
Dish Network's stock here.