In the highly competitive world of streaming television, it has long been assumed that the key to success lies in relentless subscriber growth. However, a recent development from Sling TV, a legacy live-streaming service, challenges this notion and sheds light on a significant shift in streaming strategy.
Despite years of slow and steady subscriber losses, Sling TV has consistently remained above the 2 million mark. However, its Q1 2024 earnings, announced by its new parent company EchoStar, reveal a drop to 1.92 million subscribers, marking the first time it has fallen below 2 million since 2018.
Intriguingly, EchoStar appears unconcerned by this decline. Several factors point to this. Firstly, Sling TV maintains its presence in the fiercely competitive streaming market, despite the influx of well-funded rivals. Secondly, it has tolerated negative growth for an extended period. And thirdly, it explicitly acknowledged its focus on acquiring higher-quality subscribers in its earnings statement, attributing the continued losses to this strategy.
This shift emphasizes the growing importance of Average Revenue Per User (ARPU) in the streaming business. While the concept of customers generating varying levels of revenue is not novel, EchoStar’s lack of ARPU disclosure for Sling TV customers leaves Netflix’s data as the closest benchmark. Netflix’s ARPU figures underscore the idea that subscriber count is not the sole indicator of success. By attracting subscribers who contribute more revenue, streaming services can maintain profitability even with a smaller subscriber base.
However, there is a limit to how low subscriber numbers can fall before financial viability becomes a concern. Sling TV and EchoStar must maintain a minimum number of subscribers to stay afloat. Furthermore, Fubo, a smaller streaming service with 1.5 million subscribers, poses a potential threat to Sling TV’s position in the market. Fubo has ambitious growth plans and could potentially overtake Sling TV as the third-largest live-streaming service in the near future.
Another factor to consider is the absence of local channels on Sling TV, a feature offered by its rivals. This differentiation may further limit its appeal to potential subscribers. On the other hand, YouTube TV continues to extend its lead, boasting a significantly larger subscriber base.
The evolving streaming landscape presents new challenges and opportunities for providers. Sling TV’s shift in strategy, coupled with the rise of subscriber quality as a key metric, signals a departure from the relentless pursuit of subscriber growth that has characterized the streaming wars to date.
