Satellite television service provider Dish Network has posted profits of Q3 lower than expected, despite a slight increase in the total revenue of the company. The net income of Dish Network rose to 307 million dollars, which is equal to 64 cents per share in the third quarter of the year. This is an improvement from that of last year, but the expectation of analysts was a profit of 68 cents per share.
Statistics shows that Dish Network lost about 116,000 pay-TV users in Q3, when compared to just 23,000 users in the same period last year. As per the reports of Reuters, market analysts forecasted a drop of 142,000 users. The slipping profit of Dish can be attributed to the loss of users, as many of their subscribers are migrating to online streaming options.
To support that theory, a Sandvine study reported that YouTube and Netflix accounted for half of the bandwidth used in North America. “Online video and streaming services are gaining serious ground,” Jessica Mendoza of The Christian Science Monitor reported last spring. Netflix saw an increase of more than 4 millions in their user base in the last quarter of 2014. This has made their total subscriber base to more than 57 million.
In 2014, pay-TV service providers lost about 125,000 users in 2014, which is up from 95,000 in the year 2013, as per the reports of New Hampshire-based media group Leichtman Research Group. Nevertheless, cable companies could hang on by making use of their role as internet service providers. Streaming services also put an increased burden on internet, as they are expected to provide fast and reliable video streaming.
For about two years, Sling TV from Dish Network was one of the few streaming services available that did not need satellite or cable package subscriptions. The twenty dollars per month package offered twenty-eight streaming channels to the users and the forty dollars pack offered fifty channels. However, the purchase of Time Warner by AT&T has threatened to take some of the subscribers of Sling to the DirecTV Now service, which is to be launched by late November.
Around 40 percent of the homes in the US have access to subscription video on demand (SVOD) as per the total audience report released by Nielsen. “Is the market big enough for all these services? The answer is no,” Dan Rayburn, an analyst with consulting firm Frost & Sullivan said. “They are all targeting the same audience, offering the same channels and there just isn’t enough room for more than four players.”