http://news.investors.com/technology/111715-781149-apple-web-tv-service-questioned.htm
<http://news.investors.com/technology/111715-781149-apple-web-tv-service-questioned.htm>
Apple May Rethink Web TV Service, Says Pacific Crest
Dish Network has not hit a home run with its new Sling Web TV service, and
Apple might not step up to the plate despite rampant speculation that it's
close to entering the game, says Pacific Crest Securities.
In a research <http://research.investors.com/> report reviewing media and
entertainment company Q3 earnings, analyst Andy Hargreaves sees upside for
Netflix, despite management <http://news.investors.com/management.aspx>
comments that media firms might license more content to its rival, such as
Hulu, or launch their own direct-to-consumer streaming products.
Some analysts have interpreted Q3 earnings calls comments by CBS and 21st
Century Fox as signs that an Apple Web TV service is still in the works, but
Hargreaves is cautious.
"We continue to believe an Apple-branded service with a heavy focus on
on-demand is likely. But odds may be increasing that Apple has decided the
opportunity is not worth the effort," wrote Hargreaves.
The Pacific Crest analysts noted Apple CEO Tim Cook's remarks on Oct. 19.
Linear TV "has outlived its usefulness ... it's time to lose sight of the
shore and move on with it," Cook said.
Dish Network, Sony and Verizon Communications have launched online video
services in 2015, though Verizon's is limited to mobile phone users.
Satellite TV broadcaster Dish has not regularly disclosed Sling subscriber
additions. Analysts estimate Sling had roughly 240,000 subscribers as of June
30.
After Dish Network reported earnings on Nov. 9, analysts estimated Q3 Sling
additions ranging from 24,000 to 150,000.
Hargreaves estimates 108,000 Q3 Sling additions, bringing its total to about
348,000 customers. The Sling service costs $20 monthly.
"These were good results, in our view, but adoption remains tiny relative to
the size of the market," wrote Hargreaves. "We view Sling's relatively modest
adoption as a positive indicator for the 'big-boned bundle,' where we
continue to believe consumer dissatisfaction has more to do with service
quality than the price/content relationship."
CBS and Time Warner's HBO have launched stand-alone Web offerings, and others
are expected to follow. Still, Hargreaves maintains a buy rating on Netflix
stock.
"We expect most direct-to-consumer efforts will fail to generate meaningful
scale," wrote the analyst. "The bar for gaining and sustaining viewership is
extraordinarily high. We do not believe most networks have the combination of
quality and breadth necessary to retain a meaningful number of paying
consumers."
