Sling Media’s efforts to position its new product, the SlingCatcher, as one of the hot products of the Consumers Electronics Show are in full swing. The company has been offering pre-show demos and interviews to the media and bloggers – and, not surprisingly, landed itself on the top of TechMeme.
So what is the SlingCatcher and why does everyone seem so stoked about its prospects? Unlike the Slingbox, which sends video from a TV to a PC or laptop, the SlingCatcher does the reverse by letting people send videos from their PCs to their TVs. (It reminds of the Seinfeld episode in which George decides to do everything the opposite way.) Given the fascination with YouTube videos, user-generated content and video downloads, the SlingCatcher will probably resonate with consumers, although I suspect not to the same extent as the Slingbox.
That said, the question that continues to puzzle me about Sling Media is how it intends to get an ROI from the more than $40-million of venture capital it has raised so far. If it’s just about selling $200 hardware, that’s an awful lot of Slingboxes and SlingCatchers that need to be sold (200,000 to be exact). In an ideal world, I expect Sling Media to get into the video delivery business by itself and/or with partners to create another source of revenue beyond hardware. At the very least, it could be a premium service where Sling Media offers its users access to special content such as Major League Baseball’s MLB.com package, which would play perfectly into the Slingbox demographic.
Maybe Sling Media has more tricks up its sleeves. Maybe the Slingbox and SlingCatcher are just tools to seed the market (at $200, it’s hard to go wrong. Trust me, I love my Slingbox!) before Sling Media starts to introduce premium video services. Then, it could embrace the razor-razor blade business model, and show how its investors (which include EchoStar, Liberty Media and Hearst Corp.) are going to make a return on their money.
Technorati Tags: CES, Sling Media, Video
4 Comments
Umm… 200,000 sounds like a pretty reasonable number of products to sell. You seriously don’t think that there’s a market for at least a million of these SlingThings?
Hey Mark,
At first I was scratching my head as well (how will they get the ROI on this?) – and admittedly even at the concept of using it as a receiver for youtube videos. (I’ve got an $80 Vid Card in an older PC that does that).
The link you provided though spells it all out (and a Tivo-killer at the same time). My biggest beef with my PVR at home is I can’t watch it upstairs in my bedroom. If Dave Zatz is describing it right SlingCatcher means rather then buying/renting 3 PVRs for the house (and invariably what I want to watch will be on a different unit) I can instead buy/rent a PVR, then buy a Slingbox and a couple of catchers.
This quickly becomes a way to get them beyond the 1 house 1 unit challenge. I think too though, like Tivo, hardware isn’t where their future is. If Slingbox ever manages to swing a deal with the PVR manufacturers to OEM their technology right into the PVR units things will get very, very interesting.
Good points. I’d like to use a SlingCatcher (now, that’s a call out for a demo unit…:)…..to see how someone would actually use it and why. The Slingbox makes perfect sense to me, although I think the audience is limited. The Slingcatcher? Well, we’ll see but, then again, the distribution and consumption of TV is changing so anything is possible.
200,000 units won’t get them their $40M back, as you know (they don’t have zero cost, 100% profit on this box). And the VCs expect 10x on that money too. They probably don’t have all that much margin at $200 retail, considering after retail and distribution take their cuts, there’s only $100 or so left for Sling. It’s hard to say what that leaves for gross margin after the BOM costs of the box. If we’re optimisitic, it’s maybe $40. But even a bigger expense, I’d wager, is the marketing cost. One has to wonder how much they’re spending per customer today. Convincing people to dig out $200 from their wallet can be rather expensive, especially for a product that is pure “luxury” (there is no ROI-based argument for it). With the kind of marketing I’ve seen from Sling, I wouldn’t be surprised to find their spending $100 or more per customer, meaning they are actually “buying” these customers today to get “traction” losing perhaps $50 or more per customer. All this is speculation, based on lots of experience with consumer/retail/hardware, but certainly not based on any hard specific data about Sling. So in short, they have to sell more like tens-of-millions of boxes to have the returns they and their investors want.
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