Sling Media Builds Out Its Business Model

Just over a year ago I brought a SlingBox into Canada, prior to its Canadian launch, in order to be able to watch the Turino Winter Olympics on the CBC while I was working on an assignment in California with no CBC stations – even on cable. The Canadian networks provide over 16 hours a day coverage — mostly live — as opposed to NBC’s spartan three hour nightly snapshot of events whose results are already well known. In fact I reported on it here and here. SlingBox had its Canadian launch a couple of months later in April, 2006.

One of the major questions that arose as SlingBox made its market entry was how it was going to build sustainable revenues for a business that, to date, has had $53 million of venture capital investment but really only had a “one time” hardware appliance revenue stream.. Today I had the opportunity to meet with Gregg Wilkes, Sling Media’s VP of Sales and newly anointed Manager of Online Communications David Zatz, of Zatz Not Funny fame. While they went over their new product line’s Canadian launch (for which I will provide a review later after getting some experience with the new SlingBox Pro), the more significant story is their other development activities and how it will extend their business. Basically Sling Media has two major strategies:

  • Extend the Digital Home by providing add-ons to current home entertainment devices, and
  • Build a sustainable advertising and partnering revenue stream through licensing, advertising and content syndication activities.

So how is this going to play out? Through product and service offerings that will be introduced over the spring and summer.

Before discussing the new products, let me paraphrase Greg’s explanation of Sling Media’s mission to put their product road map in perspective. Sling Media’s goal is to build the digital home lifestyle by taking basic home entertainment devices such as the television, cable box, DVD player, and even, as explained below, the PC.and extend their access both around the home and around the world.. So the original SlingBox allowed me to watch my family room TV not only in my home office but also in a Starbucks in Palm Springs, California or a hotel in Cancun, Mexico. A good analogy would be the huge parts aftermarket that has developed for the “cool” Honda Civic.

The new products are designed to expand on these “access” offerings. SlingPlayers for mobile devices and additional operating systems, new and faster multi-port Powerline Ethernet Adapters and Sling Catcher (announced at CES last month). So we will see:

  • SlingPlayers for Symbian, Palm, Macs and Windows Vista are all in beta testing now. SlingPlayer for Windows Vista will let you watch multiple SlingBoxes concurrently, thereby increasing the potential for additional SlingBox sales.
  • SlingCatcher: It is common for us to cook and eat in the kitchen while leaving the family room TV on. A primary inhibition to putting a small “monitoring” TV in the kitchen is the requirement to obtain another cable box with all the ancillary wiring and ongoing costs, not to mention countertop real estate occupied. Instead a smaller SllingCatcher can be attached to that “monitoring” TV; the SlingCatcher is attached via powerline Ethernet to the cable TV box in the family room and simulcasts the TV program onto the kitchen TV. As a second application SlingCatcher is also being designed to take the PC graphics display from my home office and put the image onto my family room TV.

This is a classic case where both customer feedback and market experience have built the case for extending the primary business through new accessory product introductions. With the goal of providing enhancements to the digital home lifestyle I can see a time when there would be flat panel displays in every room of the house but maybe only two cable TV boxes. As you enter a room you select which cable box you want to watch while in that room. And when those displays are not showing a TV program they can become digital picture frames — even changing over time through a slide show algorithm.

And how does the sustainable content and advertising revenue stream arise? Sling Media is developing a new service called “Clip ‘n Sling” where you can take snippets of a TV program, put it up on a server managed by Sling Media, and then send an email to a friend or business colleague that includes a link to the “Clip”. So a buffer will store, say, the previous five minutes of content during a hockey game. When my neighbor’s son scores a goal for the Boston Bruins (sorry UCLA fans), I can then lock in that segment, and edit it to show only the actual scoring play. Then it is put up on Sling’s content server and I send an email out to all my friends whom I know are interested in Brad’s accomplishments. But when the clip comes up, there can also be advertising and promotions for, say, the network’s other related shows such as a schedule of future Bruins games.

Sling Media is currently in negotiations with networks and other content providers such as major league sports. Suffice it to say even Major League Baseball, who raised some concerns last summer about Sling’s model, is looking at how Sling Media services can be used enhance their marketing and revenues.

But more importantly, look at how this email-based service will drive Sling’s awareness virally. Those emails can got out to anyone; no SlingPlayer or SlingBox is needed to view the video “Clips”. Subtle but very targeted promotion of SlingBoxes to build much broader awareness of its capabilities and to pull hardware sales.

With respect to copyright and other content legal issues, keep in mind that only one SlingPlayer can be taking content from a SlingBox at any one time. Sling Media is still examining whether they can and should allow more than one TV to be able to view a cable box via SlingCatcher.

Bottom line is that Sling Media is demonstrating that they know how to take a vision and expand on the vision to build sustainable revenue streams through both hardware innovation and services deployment.

Mark Evans has also posted on his visit with Sling Media today. While he talks about the syndication, licensing and advertising deals as the route to driving sales beyond hardware, I think their hardware and software developments themselves are at least equally, if not more, important for Sling Media’s foreseeable future.

Now if Sling Media would just figure out how to add that Skype accessory such that two geographically separated viewers of the same program can converse. Meantime back to watching the Bruins on my NHL Center Ice subscription via my SlingBox.

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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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