Sling TV’s disappointing performance in the first quarter cost Warren Schlichting his job as head of the service. It could be that he was punished for trying to help during this difficult time, and his good works could yet benefit Sling TV in the long run.
Sling TV’s performance under Schlichting’s guidance
Roger Lynch, the former head of Sling TV, left in early 2017. At that time, Warren Schlichting was EVP, marketing, programming, and media sales. He became head of the company at the end of the year. Between Q1 2017 and Q3 2019, Sling TV almost doubled subscribers to reach 2.7 million. The fourth quarter saw Sling TV suffer its first subscriber loss of 96,000. The first quarter was much worse, with a decline of 281,000 (an 11% decline.)
How did Sling TV’s competitors perform over the same period? AT&T TV Now (formerly DirecTV Now) grew subscribers to a peak of 1.9 million in Q3 2018, and steadily lost half of those customers by Q1 2020. Hulu Live, the linear TV portion of Hulu, has thrived since its launch in Q2 2017. By the end of 2019, the service outstripped Sling TV reaching 3.2 million customers. Hulu Live growth slowed dramatically in Q1 202, gaining just 3% compared to 18% in Q1 2019.
In other words, Sling TV performed better than AT&T Now under Mr. Schlichting’s leadership, and worse than Hulu Live.
vMVPDs caught in pay TV’s downdraft
The first quarter of 2020 was a tough one for traditional pay TV. Cable, satellite, and telco TV operators lost more than 1.75 million customers, almost double Q1 2019 losses. Undoubtedly, the impact of COVID-19 had some part to play in the acceleration. With sports vanishing from TV schedules and many talk shows reverting to “home versions” or repeats, many of those already thinking of ditching cable followed through on their intention.
Sling TV customers similarly may have found much less to watch in the service during March. Moreover, there is no penalty or barrier to getting rid of a vMVPD. A customer can turn it off and turn it back on again when their favorite sport or show returns. Moreover, Mr. Schlichting’s efforts to help during this time of crisis might have made things worse.
Sling TV’s risky gamble on free
Sling TV, unlike any of its competitors, set out to help consumers during shelter-in-place orders. Mr. Schlichting’s team made live news and on-demand content available for free with the “Stay in & SLING” initiative. He saw it as a chance to help:
“Stay in & SLING is a nice fit. Watch TV, and you can keep America healthier. It’s fun, and it’s funny, and it’s someplace we can do something. From there, we went to what we want people to do. Stay in and stay safe is step one. Step two is keeping yourself informed, and that’s where an emphasis on live linear news began to take shape.”
He expanded the program, allowing customers without a subscription to watch Sling Blue tier channels for free during primetime. Perhaps the net effect of all the free content persuaded some subscribers to pause their subscription for a while. After all, they could still watch the news and other programming for free while their favorite shows and sports were all on hiatus. It might also have discouraged some people from signing up that otherwise might have.
In the long run, Stay in & SLING might prove to have been a smart move by Mr. Schlichting. All the free programming has undoubtedly exposed many new potential customers to the Sling TV service. When sports and new programming return to TV, many of those free users may well return to Sling TV and pony up for a subscription. However, if that happens, the glory will accrue to Mr. Schlichting’s successor, Michael Schwimmer.
Why it matters
Sling TV’s head left the company after the service experienced an 11% decline in subscribers in the first quarter of 2020.
Stay in & SLING, a free TV initiative of his could have had a short-term negative effect on subscriber growth.
In the long run, Stay in & SLING could end up delivering more robust growth as it will have exposed many new potential customers to the service.