Interview: Roger Lynch, CEO of Sling TV

Sling TV has no competitors – at least not yet, says Roger Lynch, the company's CEO. In the Sling team's view, Sling TV offers something that no other service yet does: a fully mobile OTT service that matches cable's live TV offerings while shrinking the price tag and offering content   la carte.

Of course, the unique model of Sling TV comes with its own unique hurdles. With on-demand content, services can use all of a customer's bandwidth to pre-load the next few minutes of content, keeping streaming stable. Not so with live content, an issue that Lynch points to as a particular challenge for Sling.

We learned all this and more in a conversation with Mr. Lynch, who was kind enough to take the time to speak with us over the phone. Check out our full conversation below! As always, we're presenting our interview in its entirety, with only minor edits made for clarity.

Cordcutting.com: Could you describe a typical day as CEO of Sling TV?

Roger Lynch: It starts early, early in the morning when we get the reports from overnight on activation, which is what we call member signups… Typically I spend my day across of a number of areas: operations, sales and marketing performance, and the rest of the time I split between product and programmers. We obviously have a lot of activity going on with our programming partners — both current and future programming partners — and that's a significant amount of what I do, also.

Who do you consider to be your main competitors – or do you consider yourselves to have any direct competitors? And what strategies do you use to fend off their competition?

I don't think that our real competitors have yet launched. I think that, certainly, you can look at traditional paid TV providers, but that's not really where we get our customers. Our customers are people who don't have paid TV currently; only a very, very small percentage are people who have paid TV and then sign up for Sling TV. So we get people that have already cut the cord or people who have never had the cord. Those are people who chose not to have paid TV and are using maybe antennas, or Netflix, or Hulu in place of it. We're complementary to that.

Obviously Sony has a service, PlayStation Vue, that they've launched. That's an over-the-top service, but it's pretty different. First, it's only available at home. Secondly, it's much more expensive — it starts at $50, and goes up to $60 or $70 depending on the channel package. So that's really going after, we think, a different market than we're going after. That's a product that competes more with the traditional pay TV model, because it's priced similarly.

Interesting. Could you tell us a little more about the key differences between Sling TV and PlayStation Vue? You say they're targeting two different groups – what two groups would that be?

Well, the first obvious one is that theirs is $50, and we're $20. So, from a price point standpoint, they're very, very different services. Our service is available nationwide, theirs is in limited markets. Our service is more like Spotify, where you can just take it anywhere, it's in your pocket, on your phone, or on your Roku at home, or on your Xbox, or whatever. It travels with you, whereas theirs is only available at your home. So it is more of a traditional cable model than it is an over-the-top streaming model like we have.

I think we've already sort of touched on this, but what would you say your primary competitive advantage is at Sling TV?

We have a nationwide $20 offer that includes ESPN, AMC, TNT, HGTV — a number of really, really strong — some of the most popular channels. It's at a very accessible price point, doesn't require any specific hardware, you can start with a free trial, and it's available anywhere you go in the U.S.

Are there any particular types of content — like, say, sports, movies, or documentaries — that you think Sling is still a little short on, or that you're particularly interesting in bringing more of to Sling TV?

Well, sports is an area that's a strong suit for us, with all the content that we have from ESPN and the other partners. With the Turner networks we have lots of basketball, and March Madness coming up, so that's an area of strength for us. And you'll see us do more in that, bring more sports to our subscribers.

Beyond that I think we have a nice offering of general entertainment, we have a very strong kids offering, strong movies.

Would you be able to tell us which Sling TV extras package is the most popular?

[Editor's note: Mr. Lynch wasn't able to answer questions some of our specific data questions, but he did give a general answer to this one, so we're including it below.]

Well, certainly, as I mentioned, sports is one of our leading themes. It's where we have a heavy concentration of content. So our sports package is quite popular.

Could you give us an idea of what Sling TV's user base looks like demographically? Are there any demographics that you're trying to move into more?

We really go after three core segments. One is cord nevers, which tend to be people who are 25-30 years old, and we're certainly overindexed significantly in that age demographic. Then cord cutters — and these are people who are not necessarily cutting the cord today, although certainly that's a market for us — but the bigger market opportunity is the people who have cut the cord over the last four or five years, because that's, by our calculations, somewhere between five and six million households. And the third is what we call “supplementers,” who are people who have paid TV and buy Sling TV on top of it. It's the smallest of those three, but it's still a meaningful market segment for us.

Isn't your decision to be a single-stream service a little problematic from the viewpoint of families? I know that you can't stream in two places at once on Sling TV, is there a reason for that decision?

The single-stream nature of Sling wasn't a decision by us. It was something that we had to do to comply with programming partner requirements. I think we'll look at the possibility of offering more than a single stream in the future.

But when we first launched this and were getting programming partners on board, this was very new to them. And I think they wanted to be a bit cautious about how quickly things happened. A lot has changed since we signed those deals, and they now understand really that this is a growth opportunity for them going forward.

Even if traditional paid TV can stem the decline — like last quarter, which was a little bit better than prior quarters — it's still in decline. And they're seeing significant growth from businesses like ours.

So you see Sling as an increasingly appetizing opportunity for the providers themselves, the channels?

Definitely.

Speaking of the growing market, can you share how many subscribers you've added recently, and whether you're happy with your current growth?

I can't share any numbers with you, but we've been very pleased with our growth in the past. We're ahead of our plan.

Is there any possibility that growth could include a move to countries other than the U.S.?

No plans at the moment, but you know, I wouldn't rule it out. But there are no plans at the moment.

Our generally favorable Sling TV review has become one of our most commented-on posts, with many of the commenters complaining about the streaming quality. And we've seen this streaming quality inconsistency discussed in other places, on message boards and forums, as well. Do you have any response to that complaint? Do you see streaming quality as a problem area for Sling TV right now?

We know that we always have room to improve in that area.

Streaming live TV over the internet at the scale that we're doing it is relatively new, and it's a completely different animal than streaming on-demand content, because you have such little margin for error. When you think about streaming a show from Netflix or something on demand, you can use all of your available bandwidth to download and buffer that program on the device that the consumer is watching on. With live, you can't do that, because it hasn't happened yet. You can't download the next five minutes of programming onto your laptop or your Roku or whatever. So that reduced margin of error makes it a more challenging thing to accomplish.

But we're working constantly with our content delivery network partners to try to improve, especially during peak events, that performance. And we're confident that we're going to able to continue to improve that performance.

What's next for Sling TV in general? New features, new improvements, any new packages or channels?

Over the last month or so we've been rolling out improvements to the user interface – in fact, Roku's we just announced yesterday [December 1]. That's really a phase one for us of a pretty significant transformation that we're doing on the product side.

When you think about when we first launched back in February, we had 12 channels in a basic package that were mostly just about live television. Today we have 65 domestic channels and several hundred international channels, and tens of thousands of hours of on-demand content, and all kinds of different features.

So we know that there's an opportunity to really improve the content discovery function that the user interface really is there for. So we're taking the first steps of that, but you're going to see quite a bit more – some of which we'll show at CES — of how we plan to evolve that, when we really make it much easier to find the content that you're looking for rather than just surf through channels. So that's certainly an area of focus for us.

[We're also working on] more devices: we just launched Chromecast recently, and we've got more devices planned for next year, so you'll see a lot more device launches. And there's always more content coming.

What about concerns? Are there any problems on the horizon for Sling TV?

Well, I think one of the areas we're quite focused on is what's happening in Washington DC around Net Neutrality. We see concerning things happening if you look at cable companies like Comcast now instituting data caps that just happen to be at a level at or below what someone would use if they're watching TV on the internet – and at the same time launching their own streaming service that they say doesn't count against the data cap. It's something we've been warning Washington about for years, and it's a risk to OTT in general. We're Net Neutrality proponents, and want to make sure that rules are implemented so that it really is a level playing field for new players like us.

What do you think the streaming and cable landscapes will look like in five years?

You know, we tend to think about it like when satellite came into the pay TV landscape 20 years ago. Cable had grown to 65, 75 million customers, something like that, in the U.S., and it was the only game in town. And then satellite came in over the top, really, and grew to about 35 million households. Cable declined somewhat, but the overall market increased. And now we think that streaming services like Sling are the next to go over the top, and we'll probably do a similar thing.

I don't know if it will happen within five years, but you'll probably see over the top get to similar numbers that satellite got to, and take shares from both satellite and cable at some point, but that the overall market will grow. So I'd say that five years from now there are likely to be more paid TV subscribers, if you include over-the-top services like Sling TV, than there are today. But it will be an increasingly significant percentage of them that are taking services like ours rather than traditional cable or satellite.

Just to follow up on that: you're owned by Dish. Do you think that the expanding market idea is part of why that relationship makes sense? How do you view Sling TV's relationship with Dish?

You know, it's not just the relationship with Sling and Dish, it's the relationship between Sling and our programming partners. The programmers aren't interested in helping services develop that just take subscribers from their existing partners. That's not what they want to do. They want to grow their overall business. So when programmers talk to companies that may want to enter the space that we're in, I'm sure that what they're really probing is: what are you really trying to do? Are you trying to get incremental subscribers for them, in which case, yes, they're interested — or are you just really trying to go take share away from other customers that they already have, cable and satellite customers, in which case their answer is “that's not really what we're interested in doing?” We think about both of those things, not just for Dish, but for our programming partners.

But even more importantly, services that are really designed to take share away from the paid TV operators, really means you're jumping into that mix of bigger bundle offers that are more expensive, and we don't think that's really the bigger growth opportunity. That market is flat to declining right now. The market that really is growing are things like cord cutting, broadband-only household, people using antennas, things like that. And that's what we're focused on.